6-month deficit of P196.7 billion exceeds ceiling

MANILA, Philippines – The Aquino administration has inherited a budget gap of P196.7 billion in the first six months of the year, 28.2 percent more than the P153.4-billion budget deficit recorded in the same period last year.   

The six-month figure is P51.6 billion higher than the programmed ceiling of P145.2 billion for the period due mainly to higher-than-programmed spending, the Bureau of the Treasury announced yesterday.

National Treasurer Roberto Tan attributed the wider-than-expected deficit during the six-month period to the setbacks encountered by the government in the privatization of state-owned assets. The Arroyo administration had planned to raise P30 billion from the sale of government-owned assets in the first half of the year but this did not happen because of poor market conditions and administrative concerns.

“The privatization proceeds of P30 billion programmed for the first half did not happen,” Tan said.

In June alone the budget deficit hit P34.6 billion, or 14.5 percent more than the P30.2-billion deficit recorded in the same month last year.

During the six-month period, revenue collections reached P592.1 billion or P23.8 billion below the programmed revenues of P615.9 billion while expenditures amounted to P788.8 billion as against a program of P761.1 billion.

Of the P592.1 billion collected from January to June, the Bureau of Internal Revenue (BIR) raised P403.5 billion while the Bureau of Customs (BOC) generated P130.7 billion. The Bureau of the Treasury’s (BTr) income was recorded at P24.9 billion while collections from other offices was recorded at P33 billion.

In June alone, revenues reached P92.1 billion or 2.8 percent above the P89.6 billion collected a year ago while expenditures amounted to P126.7 billion or 5.8 percent above the P119.8 billion disbursed in June last year.

During the month, the BIR collected P59.4 billion while the BOC collected P23.2 billion. Bureau of the Treasury income and collections from other offices for the month were recorded at P3.4 billion and P6 billion, respectively.

With the widening budget deficit, the Aquino administration faces mounting pressure to plug revenue loopholes but it has said that it has no plans to slap new taxes.

It hopes to bring the tax effort to 15 percent of gross domestic product (GDP) in a year, an improvement from the previous government’s target to bring this to 13 percent of GDP.

The tax effort measures the government’s ability to increase tax collection that is commensurate with the growth of the economy.

In the first quarter of the year, the government’s tax effort improved to 12.3 percent of GDP from the 11.6 percent of GDP recorded in the same period in 2009.

In 2009, the government’s tax effort slid to 12.8 percent or way below the programmed 14.4 percent for the period due to a host of reasons including rampant corruption, weakened economy and the implementation of the so-called revenue-eroding measures.

It hopes to contain the budget gap at P325 billion this year or 3.9 percent of GDP from a previous estimate of roughly P300 billion or 3.6 percent of GDP. –Iris C. Gonzales (The Philippine Star)