Government returns to surplus in April

MANILA, Philippines — The government returned to a fiscal surplus in April due to a seasonal increase in monthly income tax returns, though the surplus narrowed from a year earlier due to faster spending.

Data released by the Department of the Treasury on Thursday showed the Marcos administration posted a budget surplus of 42.7 billion pesos in April.

However, the surplus in April fell by 36.03% year-on-year. This was not enough to reverse the four-month deficit, which totaled 229.9 billion pesos (up 12.66%).

When revenues exceed spending growth, there is a budget surplus, and when revenues exceed spending growth, there is a budget deficit.

read: Recto has no dream of a full-year budget surplus

April historically sees a surplus as individuals and businesses file their annual income tax returns, providing an extra boost to tax revenue.

State revenue reached 537.2 billion pesos in April, an increase of 21.9%. This brings year-to-date revenue to P1.5 trillion, an increase of 16.8%.

Collection volume increased by 21.9%

Specifically, the Bureau of Internal Revenue (BIR), which historically accounts for 80% of national tax revenue, grew 12.65% to P378.5 billion in April as both income tax and value-added tax posted double-digit growth. Since the beginning of the year, the BIR has raised P970.3 billion, a 15.35% increase.

The Bureau of Customs collected 80.7 billion pesos in import duties and other fees for the month, up 19.52 percent, bringing the Bureau of Customs’ cumulative revenue to 299.6 billion pesos, up 6.47 percent.

read: BIR, customs revenues increase in April

Meanwhile, government spending in April reached P494.5 billion, up 32.25%, mainly due to subsidies given to state-owned enterprises to finance their projects and programs. So far this year, government spending has reached P1.7 trillion, up 16.22% from the same period last year.

For Security Bank economist Robert Dan Roces, the increase in spending in April bodes well for economic growth.

“Government spending is expected to increase further in the second quarter and beyond. Increased spending will stimulate economic activity, create jobs and reverse the country’s slowing growth trajectory in private consumption and capital formation,” Rothes said.

“However, the pace and size of spending will depend on government priorities, the absorptive capacity of implementing agencies and overall fiscal space,” he added.

The Marcos administration announced a larger borrowing plan this year, increasing borrowing to 2.57 trillion pesos from 2.46 trillion pesos, to help the government raise funds to fill a larger than previously expected 1.5 trillion pesos budget gap.