P3-T revenues within median of ASEAN peers – DOF

Published June 20, 2022, 2:37 PM

by Lee C. Chipongian

The Department of Finance (DOF) said the national government’s (NG) collection of some P3-trillion revenues in 2021, about 15.5 percent of gross domestic product, remained within the median average range of other countries in the Association of Southeast Asian Nations (ASEAN) region.

DOF Director Rowena S. Sta. Clara of the Domestic Finance Group (DFG) has informed a recent DOF executive committee meeting that the outgoing Duterte administration in 2021 has reported an average revenue effort of 15.6 percent over a five-year period or between 2016 until 2021.

DOF Building in Manila

The 15.6 percent revenue effort, as previously stated, was highest ratio since the Ramos administration. “The government achieved this level of revenues despite some restrictions in economic activity last year due to the reimposition of prolonged community quarantines in response to the emergence of the more infectious Delta variant of the COVID-19 virus,” said the DOF on Monday, June 20.

According to Sta. Clara, Brunei is expected to top the list in terms of revenue effort with 19.1 percent, followed by Singapore with 18.7 percent. The Philippines’ revenue effort level is nearer Thailand’s 17 percent but it is higher than Malaysia’s 14.3 percent and Indonesia’s 11.8 percent.

“Data for other ASEAN countries are based on the projections from the International Monetary Fund (IMF) while the Philippine data is based on the actual Cash Operations Report from the Bureau of the Treasury. All data are projections except for Indonesia and the Philippines,” said Sta. Clara.

The DOF also noted on Monday that the Philippines ranked second among its ASEAN counterparts in terms of expenditures, with P4.7 trillion or 24.1 percent of GDP.

Sta. Clara said that the 10.6 percent growth in NG expenditures from 2020 to 2021 was driven by the following: infrastructure and other capital expenditures amounting to 5.8 percent of GDP; continued spending for various recovery measures, including vaccine procurement and equity infusion in support of government financial institutions’ lending assistance programs; and spending on personnel services, which has increased to about 30 percent of NG expenditures in the past decade.

The DOF said Brunei, with an expenditure-to-GDP ratio of 28.4 percent, “is projected to have spent the most last year in relation to the size of its economy.”

Singapore ranks third, with an expenditure level of 21.1 percent of GDP, roughly 3 percentage points less than the Philippines. All six countries incurred a budget deficit in 2021, said the DOF.

The DOF also noted that Brunei is projected to have the highest deficit-to-GDP ratio at 9.3 percent, followed by the Philippines with a deficit of 8.6 percent and Malaysia with 6.4 percent.

“The Philippines’ elevated deficit-to-GDP ratio since the outbreak of the COVID-19 pandemic was due to the combined impact of lower-than-usual revenues as a result of the community quarantines and the increased spending to mitigate the health and economic shocks brought about by the pandemic,” said the DOF.

The DOF added that fiscal discipline “has been a key part of the Duterte administration’s strong fiscal position ahead of the COVID-19 pandemic.”