Revenue growth drives full-year 2022 budget deficit down to 7.3 percent of GDP

The Bureau of the Treasury (BTr)’s full-year 2022 cash operations report showed that the National Government (NG)’s budget deficit narrowed down to 7.3 percent of gross domestic product (GDP) from the 8.6 percent in 2021.

This comes as 2022 revenue collections amounted to PHP3.5 trillion, which is 18 percent or PHP540.0 billion higher than that of 2021. Collections exceeded the PHP3.3 trillion program for the year, outpacing the 10.4 percent expansion in government spending.

“I commend our revenue agencies for their dedication to reaching and even surpassing their targets. Our fiscal performance has shown that we are right on track with our Medium-Term Fiscal Framework [MTFF] target to reduce the budget deficit to 3.0 percent of GDP by 2028, without compromising growth” said Finance Secretary Benjamin Diokno.

Tax revenues accounted for 91 percent or PHP3.2 trillion of the total revenue collection, exceeding the target by 2.6 percent with a 17.4 percent year-on-year (YoY) growth.

On the other hand, non-tax collections made up 9 percent of the total revenue collection, surpassing the 2022 program by almost 98 percent or PHP160.7 billion with a 23.7 percent YoY growth.

Meanwhile, the December 2022 collection of PHP268.2 billion was also higher compared to 2021 by 16 percent or PHP36.9 billion.

Revenue effort, which covers the share of tax revenues, non-tax revenues, and other government agency revenues in relation to GDP, improved to 16.1 percent from 15.5 percent in 2021 and is also higher than the 15.2 percent program.

Tax effort, which is the share of tax collections in relation to GDP, also grew to 14.6 percent from 14.1 percent in 2021 and is above the 14.4 percent target.

According to Secretary Diokno, the Philippines is on track to achieving the goal of raising the tax effort to 17.1 percent by 2028.

The Bureau of Internal Revenue (BIR) improved its overall collection by 12.4 percent, amounting to PHP2.3 trillion. However, this was still behind the PHP2.4 trillion full-year program by 2.4 percent or PHP56.9 billion. December 2022 collections increased by 10.4 percent from 2021 to PHP179.3 billion.

Bureau of Customs (BOC) collections climbed to PHP862.4 billion (net of PHP4.8 billion tax refund), outperforming the PHP643.6 billion raised in 2021 by 34.0 percent and is 19.5 percent above the PHP721.5 billion target for 2022. December 2022 collections amounted to PHP73.2 billion, higher by 21.4 percent from 2021.

This robust revenue performance was supported by efforts to ensure the recovery of deficient duties and taxes, improve tax compliance, tariffs on rice imports, and public auctions of overstaying cargo.

The BTr’s income reached PHP154.8 billion, surpassing the PHP63.4-billion full-year program by PHP91.3 billion, as well as the 2021 revenue performance by 23.5 percent.

This was largely driven by higher remittances of dividends on shares of stocks, income from Bond Sinking Fund investments, and interest on NG deposits. The PHP6.6 billion income for December 2022 indicates a 38.3 percent or PHP1.8 billion YoY expansion.

Finally, total collections from other offices (i.e. other non-tax collections including privatization proceeds, fees, and charges) amounted to PHP170.4 billion. This amount surpasses the PHP101.1 billion program by 68.6 percent with a 24-percent increase YoY.

The upturn was mainly due to the one-off remittances from the Department of Social Welfare and Development (DSWD) and Philippine Charity Sweepstakes Office (PCSO), as well as higher collections from the Bases Conversion and Development Authority (BCDA) and Department of Foreign Affairs (DFA). December collections of PHP7.8 billion were more than doubled the PHP3.1 billion recorded in December 2021.