Despite a budget deficit breaching the P1 trillion mark, the national government’s revenue collections remained strong last year, an indication that the country is poised to achieve a robust economic recovery, a ranking finance official said.
Finance Undersecretary Gil S. Beltran said there were still "positive developments” despite a series of setbacks from the prolonged pandemic. In particular, he cited that the country had managed to maintain good macroeconomic fundamentals in 2021.
Even when inflation exceeded the government’s two-four percent target band, Beltran noted that the rate of increase in consumer prices last year was “manageable.”
The Philippine Statistics Authority reported on Wednesday, Jan. 5, that inflation rate averaged at 4.5 percent in 2021.
The Duterte administration also enjoyed sustained low interest rates, and kept the government’s investment grade credit rating status, said Beltran, who is also the Department of Finance’s (DOF) chief economist.
“These positive developments augur well for a strong economic recovery as the country gradually loosens its quarantine restrictions,” Beltran said in a DOF Economic Bulletin released on Thursday, Jan. 6.
In January to October 2021, total revenue haul of the national government increased by five percent to P2.49 trillion from P2.37 trillion in the same period in the previous year.
At end-October, tax revenues rose 9.1 percent, higher than the 7.4 percent nominal gross domestic product (GDP) growth in the first three quarters of 2021.
However, the Bureau of Internal Revenue’s (BIR) collections improved by only 6.8 percent, slower than the nine-month nominal GDP growth.
Beltran said the slowdown was due to the closure of a domestic refinery which led to BIR collecting a lower share of petroleum product taxes.
But the Bureau of Customs (BOC) collections rose 17.1 percent as imports recovered.
“BOC’s collections of P525.4 billion over the period is lower by a hairline than its pre-pandemic collections of P27.7 billion,” Beltran said.
Non-tax revenues, meanwhile, dropped by 22 percent due to nonrecurrent collections last year from government corporations and government offices as mandated under Bayanihan 1.
Expenditures, on the other hand, increased by 11.5 percent, partly on account of disbursements to combat the pandemic.
On Wednesday, Socioeconomic Planning Secretary Karl Kendrick T. Chua said the Omicron variant will not slam the Philippines' growth prospects for the year, citing the fresh blow of tighter quarantine controls is only temporarily.
Two-years into the COVID-19 pandemic, Chua admitted that the virus, which was first reported in Wuhan, China in late 2019, is not going to go away easily.
The emergence of new variants, such as the highly transmissible Delta and Omicron, has shown the world that the COVID-19 virus is not going to simply disappear, Chua said in a statement.
But the good news is, Chua said “even as we temporarily impose more stringent restrictions to contain the spread of the Omicron variant, we have learned to manage the risks and live with the virus.”
The Philippines expects its economy, as measured by GDP, will grow by seven percent to nine percent this year. However, Metro Manila and nearby provinces went back to the more strict Alert Level 3 from Jan. 3 to 15.
“Economic prospects in 2022 still remain promising, and we urge everyone to play their role in the recovery by getting vaccinated, availing of booster shots, and strictly adhering to the minimum public health standards,” Chua said.
The heightened alert level in the first few weeks of the year was in response to the sustained rise in daily infections of COVID-19 in the country.