PHL posts P47.8 billion budget deficit in July 2023

The Philippine National Government’s (NG) budget deficit for July declined to P47.8 billion from P86.8 billion a year ago on the back of 33.40% higher growth in revenue collection versus the 16.22% increase in government expenditures.

The year-to-date (YTD) fiscal performance resulted in a cumulative budget gap of P599.5 billion, also down by 21.22% or P161.5 billion compared to the P761.0 billion shortfall registered in the first seven months of the previous year.

Revenue Performance

The NG registered a substantial growth of 33.40% or P103.1 billion in its July revenue collection, reaching P411.7 billion, as both tax and non-tax collections improved for the period.

The positive outturn for the month drove the YTD collection to P2.3 trillion, reflecting an 11.58% or P235.7 billion increase over last year’s comparable performance.

Taxes comprising the biggest portion (88.74%) of total revenue expanded by 10.52% with the remaining balance of 11.26% (P255.8 billion) coming from non-tax revenues, which also improved by 20.72%.

The Bureau of Internal Revenue’s (BIR) net collection reached P273.1 billion for July after deducting the P186.0 million tax refund, representing a 38.37% (P75.7 billion) increase over last year’s comparable outturn. This growth translated into a YTD improvement of 12.21% or P162.4 billion, bringing the agency’s total collection to P1.5 trillion.

Meanwhile, total collection by the Bureau of Customs (BOC) amounting to P73.1 billion^[1] showed a 12.61% (P10.5 billion) decline in July 2023 compared to the P83.6 billion raised for the same month last year. Nevertheless, BOC still managed to improve its cumulative collection to P506.5 billion for the Jan-Jul period, growing by 5.45% or P26.2 billion from the previous year’s accomplishment of P480.3 billion.

Income from the Bureau of the Treasury (BTr) surged to P50.8 billion in July from P13.4 billion a year ago, posting its highest monthly collection for the year. BTr’s collection for the 7-month period consequently rose to P143.8 billion, 22.40% or P26.3 billion higher than the 2022 comparable performance and has already exceeded the full-year target of P58.3 billion largely due to higher dividend remittances^[2], income from managed funds and government deposits, as well as NG share from PAGCOR profit.

Non-tax revenue from other offices including privatization proceeds and fees and charges amounting to P12.4 billion remained relatively stable compared to the level recorded in the previous year. Meanwhile, the end-July revenue totaled P112.0 billion, increasing by 18.63% or P17.6 billion YoY partly due to one-off remittances from PCSO, DFA, and BCDA³.

Expenditure Performance

NG disbursements increased to P459.5 billion in July this year from P395.4 billion in July 2022, marking a YoY growth of 16.22% or P64.1 billion due to higher disbursements recorded in the Department of Social Welfare and Development for its social protection programs, and in the Department of Health and Department of Agriculture for their banner health and agriculture programs, respectively.

Spending in July also expanded on the back of significant infrastructure outlays of the Department of Public Works and Highways for its road network development program and the Department of Transportation for rail transport projects.  Total YTD expenditures of P2.9 trillion posted a 2.66% (P74.3 billion) growth over the spending performance for the same period last year.

Primary expenditures reached P396.0 billion, indicating a 15.35% or P52.7 billion YoY improvement. This offset the P15.1 billion decrease in H1 2023 allowing primary expenditures of P2.5 trillion as of end-July to grow by 1.51% from last year’s level.

July Interest payments (IP) amounted to P63.6 billion compared to last year’s P52.1 billion, 22.0% (P11.5 billion) higher YoY. The resulting YTD IP likewise went up by

11.87% (P36.7 billion) from the previous year to P346.0 billion. Jan-Jul IP comprised

12.05% of the total expenditure, higher than last year’s 11.06%. Meanwhile, IP as a percentage of total revenues inched up to 15.23% from 15.19% in 2022.

Primary Surplus/(Deficit)

Deducting IP from expenditures, NG’s primary balance for July turned to a primary surplus of P15.7 billion from last year’s primary deficit of P34.7 billion. Meanwhile, the resulting overall primary deficit of P253.5 billion declined by 43.87% or P198.2 billion versus last year’s YTD primary deficit of P451.7 billion.

Fiscal Indicators

Real GDP growth for Q2 2023 slowed to 4.3%, lower than both the 7.5% recorded in the same quarter a year ago and 6.4% expansion in Q1 2023.

The Q2 and H1 deficit stood at 4.77% and 4.80% of GDP, down from 6.62% and 6.53% last year, respectively. Revenue effort for H1 2023 moderated to 16.19% from last year’s 16.73%. Tax effort similarly slowed to 14.52% from 14.93% in the same period last year.

Lastly, expenditure effort went down to 21.00% from the previous year’s 23.26%.

3 Covers PCSO remittance for the Universal Health Care Act, DFA collections for Q4 2022 to H1 2023, and BCDA remittance of AFP share from asset disposition.

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[1] Net of P757.0 million tax refund; BOC July gross collection is P73.8 billion when tax refund is included.

[2] Includes dividend remittances from BSP amounting to 31.9 billion.

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Trunkline (+632) 663-2287 URL: www.treasury.gov.ph