Govt underspends by P154B in H1

THE national government did not spend as much as it should have during the first half of this year, according to figures issued on Tuesday by the Bureau of the Treasury (BTr).

From January to June 2022, the national government's budget deficit was P674.2 billion, or 18.64 percent less than its P828.7-billion program.

Additionally, the gap was smaller than the P716.1-billion shortfall from the same time last year by 5.84 percent. The BTr attributed the deficit being less than anticipated to “higher revenue out turn for the period.”

Revenues during the course of the six-month period were P1.72 trillion, exceeding the P1.64-trillion target by 4.80 percent and increasing by 15.91 percent from P1.49 trillion a year earlier.

“Broken down, tax revenues made up 89 percent or P1,541.2 billion of the total whereas non-tax collections contributed the remaining 11 percent or P186.3 billion,” the Treasury added.

State spending in the six months leading to June 2022 amounted to P2.40 trillion, gaining 8.85 percent from the actual disbursement a year earlier, but falling 3.04-percent short of the P2.47-trillion budget.

The underspending “can be largely attributed to the slower-than-expected capital expenditures amid the election ban in late March up to early May, as well as the timing of release for the special shares of LGUs (local government units) in the proceeds of national taxes to July,” the bureau underscored.

It also said due to the previously mentioned factors, the final total primary expenditures of P2.14 trillion fell short of the P2.22-trillion program by 3.57 percent, or P79.5 billion, but were nevertheless 7.34 percent higher than the previous year's level.

The BTr said year-to-date interest payments from January to June this year increased to P257.2 billion, a 23.34-percent or P48.7-billion pick up over what was observed during the same time the previous year.

As a percentage of expenditure and revenue, it said interest payments for the period of January through June 2022 represented 10.71 percent and 14.89 percent, respectively, compared to 9.45 percent and 13.99 percent last year.

The first half of 2022's total primary deficit of P417 billion decreased by 17.84 percent, or P90.5 billion, on a year-on-year basis, and was lower than the program by 27.55 percent, or P158.5 billion, the Treasury noted.

“Measures to further reopen the economy toward greater normalcy, such as the proposed nationwide Alert Level 1, would further help improve… the government's tax revenue collections and also help curb the growth in government spending, especially on various Covid programs for the coming months…,” Michael Ricafort, chief economist at Rizal Commercial Banking Corp., commented.

He said maintaining the government's improved fiscal performance over the past few years and relatively favorable credit ratings would depend on how the new administration and the economic team would ensure and implement increased tax revenue collections, as well as maintaining economic and fiscal reform measures for the upcoming years.

“The government's decision to maintain excise taxes on petroleum products would help sustain the government's recurring revenue collections and prevent unnecessary widening of the country's budget deficit…,” Ricafort emphasized.