Budget impasse tagged as govt posts Jan surplus
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Mon, 18 Mar 2019 16:20:14 +0000
THE government incurred a budget surplus in January as state spending contracted because of Congress’ inability to pass the 2019 outlay, the Bureau of the Treasury said on Monday.
The month’s P44.5-billion surplus was a reversal of the P81.042-billion deficit posted in December and was also higher than the P10.2-billion surplus recorded a year earlier.
Government revenues rose by 7 percent to P256.7 billion, from P238.9 billion last year, while expenditures contracted 7 percent to P212.2 billion from P228.7 billion. A month earlier, revenues rose by 4 percent while expenditures fell by 5 percent.
The Bureau of Internal Revenue (BIR) accounted for the bulk of revenues with P185.1 billion, 5 percent higher compared to the year-earlier P175.6 billion. Revenue growth was flat in December.
The Treasury bureau said the BIR’s increased contribution was “partially due to the increased excise tax on some products identified under the Train law.”
Implemented at the start of 2018, the Tax Reform for Acceleration and Inclusion law raised taxes on petroleum products and car sales, among others, in exchange for lower personal income tax rates.
The Bureau of Customs (BoC), meanwhile, netted P48.4 billion — an 18-percent gain from last year’s P40.8 billion — while other offices contributed P1.5 billion, bringing total tax revenues for the month to P235 billion. Tax revenue growth was faster at 8 percent from the 4 percent a month earlier.
“The BoC managed to grow its collection on the back of process improvements implemented by the agency, such as tighter monitoring of imports and proper valuation of goods,” the Treasury said.
Non-tax earnings, meanwhile, totaled P21.8 billion with the Treasury contributing P9 billion — up 5 percent. Other offices contributed P12.8 billion, flat from last year.
Spending
The bulk of government spending or P166.3 billion was for primary expenditures but it fell 10 percent from P185.2 billion a year ago.
“The contraction in government spending resulted largely from the delays in the implementation of new government projects and salary adjustments due to the deferred passage of the 2019 GAA (General Appropriations Act),” the Treasury bureau said.
The government has been operating on last year’s P3.767-trillion budget since the start of the year. While larger, agencies can only spend for items detailed in the 2018 outlay and cannot embark on programs and projects supposed to be implemented this year.
Finance Secretary Carlos Dominguez 3rd has said that the government will be unable to spend a programmed P46 billion during the first three months of the year given the delay in the passage of the 2019 budget.
While lawmakers have already ratified a reconciled version of the 2019 budget bill, the measure has yet to be transmitted to Malacañang given the Senate’s claims that the House of
Representatives made post-bicameral conference committee changes.
The impasse could soon be over, however, as the House of Representatives has reportedly agreed to recall the revised version.
“We had previously flagged the budget delay as one of the main speedbumps to Philippines growth in 2019, one of the few reasons why we will likely see growth challenged somewhat in the first half of the year,” ING Bank Manila Branch senior economist Nicholas Antonio Mapa said when asked to comment on the budget balance data.
Mapa recalled that government spending had helped buttress the economy last year, delivering 1.1 percentage points to overall 6.2 percent growth.
“Given the protracted delay in the budget hearings, the January numbers give us indication that we may not be able to count on government spending as heavily as we did in 2018, should the 2019 budget go unsigned and that warnings from NEDA (National Economic and Development Authority) may be more substantial than initially thought,” he added.
The NEDA last week warned that Philippine economic growth could decelerate sharply to 4.2-4.9 percent under a full-year reenacted budget.
Economic managers have also cut their growth targets for 2019 and 2020, citing the reenacted budget, an ongoing El Niño and the US-China trade war.
The interagency Development Budget Coordination Committee is now aiming for 6.0-7.0 percent growth this year and 6.7-7.5 percent next year, down from 7.0-8.0 percent previously.
Congress, Mapa said, should work together to get the GAA signed and delivered at the soonest.
Interest payments
Interest payments of P45.9 billion in January, meanwhile, accounted for the rest of state spending.
It grew by 6 percent year-on-year “mainly due to the timing of payment for global bonds amounting to P1.2 billion which was paid in February last year, as well as upward adjustments in FX and Libor rates,” the Treasury said.
The primary balance hit a surplus of P90.5 billion, 68 percent bigger than last year’s P53.7 billion.
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