NG richer by 9.7% during H1

The delay in the passage by Congress of the 2019 Budget weakened expenditures and the domestic economy

Revenues of the national government (NG) rose by 9.7 percent in the first semester of 2019, outstripping nominal gross domestic product (GDP) growth which registered 7.0 percent for the semester, the Department of Finance (DoF) reported.

During the period, tax revenues grew by 10.1 percent, also exceeding the 7.0 percent nominal GDP growth, with collections from the Bureau of Internal Revenue (BIR) rising by 10.6 percent and Bureau of Customs collections rising by 8.5 percent.

In its report, DoF attributed the higher income to the second phase of TRAIN 1 and continued tax administration reforms.

“Non-tax revenues rose by 6.9 percent due to higher collections of dividend remittances on national government shares of stocks, guarantee fees, and share in the profits of the Philippine Amusement and Gaming Corp. or PAGCOR,” the DoF report stated.

“Expenditures plunged by 0.8 percent in the first semester of 2019, the first drop experienced during the first semester since 2011. This is a significant reversal from the 20.5 percent rise in the same semester of 2018. This is due to the four-and-a-half-month delay in the approval of the General Appropriations Act by Congress.”

Revenue effort rose by 0.44 percentage point to 17.52 percent in the first semester of 2019 compared to 17.08 percent in the same semester of last year. Tax effort also rose by 0.43 percentage point, from 15.20 percent to 15.63 percent.

In contrast, expenditure effort declined to 18.00 percent, lower than the 19.42 percent recorded in the first semester of 2018 due to the reenacted budget. The moderated growth in expenditures led to a lower NG deficit, which settled at 0.48 percent of GDP.

“The delay in the passage by Congress of the 2019 Budget weakened expenditures and the domestic economy. NG underspending was estimated at around PHP 178 Billion. This is about 2 percent of first semester nominal GDP.