Government's budget balance returns to deficit in May

MANILA, Philippines — The government’s budget balance swung back to a deficit in May after a brief surplus in April, with the fiscal gap still among the major economic problems awaiting the incoming Marcos Jr. administration.

Treasury data released on Thursday revealed that the Duterte administration incurred a budget shortfall of P146.8 billion in May, albeit 26.7% smaller compared with a year ago.

A deficit means the government is spending beyond its means. To bridge the fiscal gap, the government typically borrows money from creditors at home and abroad.

But data showed the government still incurred a budget deficit in May despite improving revenue collections and easing public spending during the month. In the first five months of the year, the deficit amounted to P458.7 billion.

Broken down, revenues rose 18.91% year-on-year to P304.9 billion in May, reflecting the larger hauls from Bureau of Internal Revenue and Bureau of Customs. Specifically, Mapa said the higher Customs collections were due to expensive crude oil prices.

Government expenditures, meanwhile, went down 1.1% year-on-year to P5 billion amid a spending ban before the elections.

For Nicholas Mapa, senior economist at ING Bank in Manila, the large budget shortfall could affect the spending priorities of the next administration.

"...The incoming administration has signaled a willingness to pursue aggressive spending despite high levels of debt and deficit," Mapa said in a Viber message.

"Should a sizable fiscal stimulus package be deployed this year, we could see the deficit widen unless revenue collection can keep up," he added.