MANILA, Philippines – The country’s budget deficit ballooned in January as the government ramped up spending for the reconstruction of areas devastated by Super Typhoon Yolanda.
In a statement, the Department of Finance said the deficit expanded by 75 percent to P34.2 billion in January from P19.5 billion in the same month last year.
A deficit occurs when government expenditure exceeds revenue over a particular period of time.
Excluding interest payments on the government’s debt, the deficit turns into a primary surplus of P22.2 billion.
“The Philippines’ fiscal performance figures in recent years are a manifestation of restored normalcy in meeting the expectations of the Development Budget Coordination Committee,” Finance Secretary Purisima said.
Purisima credited the country’s sound fiscal performance to improving revenue collections, declining reliance on foreign currency debt and President Aquino’s drive to transform the country into one of the fastest-growing economies.
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He said the Philippines has gotten closer to achieving its annual revenue targets over the last four years. In 2013, state revenues were just 1.7 percent short of the official target.
Revenue collections for January rose eight percent to P148.8 billion with tax revenues accounting for 91 percent or P134.8 billion of the total or an increase of 12 percent year on year.
The Bureau of Internal Revenue and the Bureau of Customs posted double-digit growth rates amid an intensified campaign to curb smuggling and tax evasion.
BIR collections grew 10 percent to P104.2 billion in January while BOC collections jumped by an impressive 21 percent to P29.8 billion.
The sharp rise in collections of the BOC reflects the combined impact of aggressive reform initiatives being undertaken by its new management, and a depreciating peso.
The Bureau of Treasury, on the other hand, contributed P7.5 billion, down 19 percent due to lower income from managed funds and lower remittances of dividends on government shares of stocks. The amount, however, was 8.7 percent higher than its P6.9 billion collection goal for the month.
Other offices, meanwhile, remitted P7.4 billion or 4.9 percent of the government’s aggregate revenues.
Disbursements for the first month of the year jumped 16 percent to P183 billion as the government stepped up spending for the reconstruction of areas hit by natural disasters.
Of the total, P56.5 billion or 31 percent accounted for interest payments. This was an improvement from the 35 percent recorded in January 2013, reflecting the government’s prudent management of interest expenditures.
Typhoon Yolanda, which slammed into the central part of the Philippines last November 8, is seen to affect economic growth this year and next year as the country grapples with massive rehabilitation costs.
The cost of reconstruction was placed at about P361 billion or $8.2 billion.
The country’s economic managers, however, believe that rebuilding will augur well for the country over the long-term as the government keeps its deficit within two percent of GDP (gross domestic product) up to the time Aquino steps down from office in 2016.
“Through even more aggressive and prudent efforts in stamping out corruption, widening our tax base, and managing our liabilities, I believe this newfound confidence in the Philippines’ fiscal performance is something that we can sustain,” Purisima said.
