2019News

Fiscal data bear imprint of budget delay

By Karl Angelo N. Vidal, March 19 2019; Business World

https://www.bworldonline.com/fiscal-data-bear-imprint-of-budget-delay/

Image Credit to Business World

THE GOVERNMENT posted its first fiscal surplus in nine months in January, according to latest official data the Bureau of the Treasury released on Monday, with a drop in state spending blamed on delayed enactment of 2019’s P3.757-trillion national budget.

The state budget balance yielded a P44.5-billion surplus as the year opened, more than four times the P10.2-billion surfeit recorded in the same month in 2018 and the first surplus since April 2018’s P46.315 billion.

The government raked in some P256.7 billion in revenues, about seven percent more than the P238.9 billion collected in January last year.

Of that amount, tax revenues amounted to P235 billion, eight percent more than the year-ago P218.1 billion.

The Bureau of Internal Revenue contributed 72% to total revenues and 78.7% of tax revenues at P185.1 billion, five percent more than P175.6 billion a year ago.

The Customs bureau — the government’s second-biggest tax collector — accounted for 18.9% of total revenues and a fifth of tax revenues at P48.4 billion, 18% more than the P40.8 billion it collected last year.

In a statement, the Treasury attributed the increase in BIR collections “partially… to the increased excise tax on some products” under Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Act, particularly on fuel which got a P2 per liter hike as 2019 began after a P6-per-liter increase last year.

Other state offices brought in P1.5 billion in January, seven percent less than the year-ago P1.6 billion.

Non-tax revenues — including tax subsidies for state importation and other transactions — grew five percent to P21.8 billion from P20.8 billion.

Reflecting Congress’ failure to approve the proposed 2019 national budget by yearend — resulting in a re-enacted 2018 spending plan that left new projects unfunded — state disbursements dropped seven percent to P212.2 billion from P228.7 billion. Significantly, spending on items other than interest payments — a category that includes infrastructure — fell by a bigger 10% to P166.3 billion from P185.2 billion.

“The contraction in government spending resulted largely from delays in the implementation of new government projects and salary adjustments due to the deferred passage of the 2019 GAA” the Treasury said in its statement referring to the general appropriations act.

National Treasurer Rosalia V. De Leon told reporters following Monday’s Treasury bill auction: “Really, there’s a significant impact of the reenactment of the budget on spending, particularly on the new expenditures and the capital outlays, including of course the salary adjustments.”

On Friday last week, the Department of Budget and Management recommended to the Office of the President an amendment of Executive Order No. 201, which provided the fourth tranche of state employees’ salary adjustments. The amendment will “authorize government agencies the use of available appropriations under the reenacted budget in the meantime to meet the funding requirements of the salary adjustments.”

The inter-agency Development Budget Coordination Committee on Wednesday last week slashed its 2019 gross domestic product growth forecast to 6-7% from 7-8% originally as the government operates on a reenacted budget, while the National Economic and Development Authority said separately on the same day that GDP could expand by as little as 4.2-4.9% if the new budget were enacted as late as August.

Interest payments grew by six percent to P45.9 billion from P43.5 billion.

Net of interest payments, the government’s primary surplus surged by 68% to P90.5 billion in January from the year-ago P53.7 billion.

The administration of President Rodrigo R. Duterte has programmed an even bigger deficit this year of P624.4 billion — equivalent to about 3.2% of GDP — from the actual P558.3 billion deficit in 2018 to accommodate bigger provisions for infrastructure projects. — Karl Angelo N. Vidal

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