The government reverted back to a budget deficit in February after a quick surplus at the start of 2023, but a narrower gap can still be expected as the tax season draws near.

Latest data from the Bureau of the Treasury showed that the government swung back to a budget deficit of P106.4 billion in February from a brief surplus of P46 billion at the onset of 2023.

The February fiscal turnout, however, is just slightly up by 0.54 percent from the P105.8-billion shortfall in the same period last year.

A budget deficit means that the government is spending beyond what it earned from revenue collections, at a slightly faster pace this time around.

For the two-month period, nonetheless, the budget deficit eased by 53 percent to P60.6 billion from P129.2 billion a year ago, as revenues picked up while spending was almost flat in January and February.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said elevated inflation and high interest rates may have affected tax revenue collections of the government.

With the February fiscal turnout, Ricafort said there is an urgent need for tax reform measures that would boost revenue collections and improve the country's fiscal performance and more sustainable debt management.

For the next few months, the government may record narrower budget deficits or even post another surplus amid the tax collection season that may allow the administration to rake in higher revenues.

Data showed that total revenue collection in February slightly went down by 0.25 percent to P211.9 billion, as against the P212. 4 billion in the same period last year, as tax revenues declined.

The bulk or 91 percent of the revenues came from tax collections at P192.3 billion, down three percent. Non-tax collections, on the other hand, improved by nearly 40 percent to P19.6 billion in February.

The Bureau of Internal Revenue's haul went down by five percent to P129.4 billion while the Bureau of Customs saw its collection increase by six percent to P62.9 billion from P59.4 billion year-on-year.

Further, income generated by the Treasury went up 51 percent to P 6.4 billion on the back of higher investment, remittance of shares in the Philippine Amusement and Gaming Corp. profit, and interest on national government deposits.

Collection from other offices including privatization proceeds and fees and charges for the month also rose by 33 percent to P13.2 billion.

Year-to-date, cumulative revenue collections picked up by 14 percent to reach P560 billion.

On the other hand, government spending in February barely moved at P318.2 billion.

Primary expenditures at P284.1 billion accounted for 89 percent of the total spending, down by two percent.

The Treasury said that spending for the month was dampened by the decline of the national tax allotment (NTA) shares of local government units due to lower national tax collections in 2020, which was the base year for the determination of the 2023 shares.

Sans the NTA, expenditures would have expanded by almost five percent on higher disbursements for road infrastructure, health and education programs.

Apart from primary expenditures, the government increased its interest payments by 21 percent to P34.1 billion from P28.2 billion a year ago due to the low base in 2022, as payments made regularly in February were paid in advance in January 2022.

For the two-month period, disbursements barely moved by 0.16 percent to P620.7 billion.


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