The government incurred a P50-billion budget deficit in July, the first month in office of the Duterte administration, as revenue collection shrank and expenditures rose from a year ago.
The cash operations report released by the Bureau of Treasury Tuesday showed the budget deficit in July was 57 percent higher than the P32.2-billion budget shortfall registered in the same month last year.
It also brought the total budget deficit in the first seven months to P171 billion, much higher than the P18.5-billion gap recorded in the same period in 2015, as expenditure growth outpaced the weak expansion in revenue collection.
The government said netting out interest payments, it still posted a primary balance surplus of P10.6 billion in July.
Data showed government revenues fell 5 percent year-on-year to P170.3 billion in July, bringing year-to-date collections to P1.27 trillion.
Tax collection by the Bureau of Internal Revenue declined 1 percent in July to P117.4 billion, but the seven-month tally still registered a 9-percent growth to P900.9 billion.
Bureau of Customs collection improved 3 percent in July to P31 billion while the seven-month tally increased 6 percent to P221.5 billion.
Treasury income slid 36 percent to P9.1 billion in July, because of lower income from Bond Sinking Fund and Security Stabilization Fund deposits.
This brought total Treasury income in the seven-month period to P8.5 billion, or 10 percent lower than a year ago.
Collections from other offices contributed P12.8 billion in July, down by 27 percent from the 2015 level. Year-to-date revenue from other offices sank 52 percent to P76 billion year-on-year.
“[This is] due to the aforementioned P60.1 billion transfer of Coconut Levy assets which boosted receipts in May 2015,” the Treasury said.
Meanwhile, government expenditures recovered from last month’s contraction to reach P220.9 billion in July, or 5 percent higher than P210.7 billion posted in the same month in 2015.
Government expenditures in the seven-month period rose 12 percent to P1.44 trillion from a year ago. Interest payments, comprising 18 percent of the total expenditures, went down by 25 percent to P40.0 billion.
The government set a budget deficit ceiling of 2.7 percent of gross domestic product in 2016. To fund the deficit target, the government needed to borrow from either local and foreign sources.
The ratio between the country’s debt and the whole economy dropped to 43 percent of GDP in the first half of 2016 from 44.9 percent in the same period a year ago.
This was also an improvement from the 44.7 percent debt-to-GDP ratio as of end-2015.
Finance Secretary Carlos Dominguez III said during the inter-agency Development Budget Coordination Committee hearing in Senate on Tuesday said he expected debt-to-GDP ratio to further drop to 42.8 percent and 41.6 percent in 2016 and 2017, respectively.
“We are fortunate that the last two administrations have managed government finances well, as this has given us headroom for higher public spending… We will absolutely make sure we do not breach the deficit ceiling,” Dominguez said.
Dominguez said the targeted budget-deficit ceiling of 3 percent of GDP up to 2022 would be observed by the Duterte administration.