Philippines: Fiscal deficit narrows to P350.6 billion in 2017

• Feb 28, 2018

MANILA, Philippines — The national government’s fiscal deficit narrowed to P350.6 billion in 2017, falling below the programmed deficit for the year amid higher revenue collections and below-target spending, the Bureau of the Treasury (BTr) reported yesterday.

In its latest cash operations report released yesterday, the Treasury said the latest deficit figure was 27 percent below the P482.1 billion deficit target. It was also one percent lower than the P353.4 billion budget deficit recorded in 2016.

In proportion to the economy, the National Treasury said last year’s fiscal deficit accounted for 2.2 percent of the country’s GDP, also below the 2.4 percent ratio posted in 2016. It was also lower than the three percent deficit-to-GDP ratio ceiling set by the government.

A deficit occurs when government’s expenditures exceed the revenue that it generates.

The Treasury attributed the narrower deficit in 2017 to the stronger-than-programmed collections and below-target expenditures.

Treasury data showed the national government’s full-year revenue amounted to P2.47 trillion last year, exceeding the P2.43 trillion programmed by the national government. This also grew 13 percent  from the P2.2 trillion recorded in 2016, the highest annual growth posted since 2013.

The bulk of the amount came from tax revenues amounting to P2.25 trillion, which was slightly below the total tax collection goal of P2.26 trillion. It was, however, offset by non-tax revenues, which exceeded the target by 32 percent at P222.5 billion.

Of the total tax revenues in 2017, P1.77 trillion came from the Bureau of Internal Revenue (BIR).

The bureau’s collection was below the P1.78 trillion target for the period, but saw a 13 percent improvement from the previous year’s collection of P1.57 trillion.

The Bureau of Customs, meanwhile, generated P458.2 billion in revenue in 2017, also slightly below the P459.6 billion target. This was, however, 16 percent higher than the previous year’s collection of P396.4 billion.

On the other hand, non-tax revenues amounted to P99.9 billion in 2017, surpassing the target by 71 percent despite the two percent decline in revenue from the previous year’s level.

Non-tax collections from other offices also rose eight percent to P122.5 billion year-on-year, exceeding the program by 11 percent.

Meanwhile, the Treasury reported that government disbursements in 2017 grew 11 percent to P2.82 trillion from the P2.55 trillion reported a year ago.

“Of the total, 89 percent were for primary expenditures, while the remaining 11 percent went to interest payments. Productive government spending amounted to P2.51 trillion, up by 12 percent from 2016,” the BTr said.

Interest payments increased two percent to P310.5 billion last year, but remained seven percent below program, generating savings of P24.3 billion for the government.

The BTr said the share of interest payments to total revenue decreased to 12.6 percent from 13.9 percent in 2016, “indicative of improved capacity by the national government to service its debt.”

Net of interest payments, actual government spending stood at P2.51 trillion, two percent lower than the disbursement program of P2.57 trillion.

Source: https://www.philstar.com/business/2018/02/28/1791965/fiscal-deficit-narrows-p3506-billion-2017#Ehbe7MOexry35sIf.99