April budget surplus at record high

Posted at 05/21/2012 2:36 PM | Updated as of 05/21/2012 6:35 PM

April budget surplus P31.02B vs year-ago P26.26B

MANILA, Philippines (UPDATE) - The Philippines posted a record-high budget surplus in April, helped by an almost 11% annual growth in total revenues during the country's biggest income tax month, data showed on Monday.          

The surplus in April, the second monthly surplus this year, brought the fiscal shortfall in the first four months to P2.89 billion ($67 million), just under 3% of the programmed deficit for the first half.  Manila is targeting a budget deficit of P109.34 billion in January to June. 
                   
In April, total revenues were up 10.8% to P153.27 billion. In the January to April period, revenues grew by 11.4% to P514.242 billion.

While the Bureau of Internal Revenue (BIR) missed its collections target by 5.3% in April, data showed its average growth rate from January to April hit 15%.

"This proves that there remains to be space for tax collections to grow considerably through process re-engineering and efficient tax administration marked by a sustained campaign against smuggling and tax evasion," Finance Secretary Cesar V. Purisima said, in a statement.

The government spent P122.24 billion in April, 9.1% higher than the same month last year. For the January to April period, the government spent P517.127 billion, a 12.1% improvement year-on-year.

"We are pleased to report that government disbursements continue to grow and to reverse the contraction of disbursements last year...  We acknowledge that government spending, especially on priority programs and projects of the administration, needs to grow at a much faster pace in order to support our development targets," Budget Secretary Florencio B. Abad said, in a separate statement.
 
Netting out interest payments, the government is still operating under a primary surplus of P111.742 billion as of April.

"Despite accelerated spending in the first four months of the year, consistently strong revenue growth has ensured that the budget deficit remained relatively small.  Credit should be given to the administration for its
handling of the budget and the government is certainly well-placed to engage in higher levels of spending to cushion the impact of weak external demand," said Eugene Leow, economist at DBS Singapore.

Radhika Rao, economist at Forecast Pte Singapore, said the surplus is not a surprise considering April is a strong month for collections.

"Passage of the sin-tax bill would be a timely step forward, though the government might not be able to overlook the need for fresh tax measures to bolster public finances and convince rating agencies that Manila deserves a ratings upgrade," Rao said.

The Southeast Asian country, criticized for weak spending that pulled down overall economic growth in 2011, committed to step up spending of its P1.8 trillion budget early this year to help meet its 5 to 6% growth target in 2012. - With Reuters