MANILA — The Philippine government’s budget gap has registered a 36 percent year-on-year rise as of end-July 2018 as the Duterte administration implements its infrastructure projects, among others.
Bureau of the Treasury (BTr) data show that at the end of the first seven months this year, budget deficit reached PHP279.4 billion, higher than the PHP205 billion same period in 2017.
The budget gap transpired even with the continued rise of both the revenues since expenditures are also rising.
Revenues as of end-July this year rose 21 percent year-on-year to PHP1.652 trillion and spending ticked-up higher at 23 percent to PHP1.931 trillion.
Relatively, data from Department of Budget and Management (DBM) show that in the first half this year, spending for infrastructure and other capital outlays alone rose 41.6 percent year-on-year to PHP352.7 billion.
Specifically, disbursement for infrastructure projects improved by 4.3 percent year-on-year.
With the increased budget deficit and higher funding needs, the government can lessen the share of local government units’ (LGU) Internal Revenue Allotment (IRA) to have adequate funds for projects of the national government.
“There is a provision in the Local Government Code that in the event of an unmanageable public sector deficit the President has the option to reduce IRA from 40 percent to 30 percent so we’ll use that,” Budget and Management Secretary Benjamin Diokno said during the 2nd Economic Journalists Association of the Philippines (EJAP) Forum Tuesday.
The government needs all resources it has to finance its massive infrastructure projects, among others. Under the “Build, Build, Build” program, the current administration plans to spend at least PHP8 trillion until 2022 to put up necessary infrastructure nationwide to ensure strong growth of the domestic economy.
While the government is committed to finance all its priority programs it faces some hurdles such as recent Supreme Court (SC) ruling that expanded the source of IRA to “all” national taxes.
Earlier, Finance Secretary Carlos Dominguez III said economic managers have recommended the filing of a motion for reconsideration against the High Court’s decision.
In a 42-page decision released in July, the SC said “just share” of LGUs should be sourced not just on internal revenue collections as what is currently being done but from all national taxes.
Internal revenues are those collected by the Bureau of Internal Revenue (BIR), which collects about 70 percent of state revenues.
On the other hand, national taxes include those collected by the Bureau of Customs (BOC) like tariff.
Section 284 of Republic Act (RA) No. 7160, otherwise known as the Local Government Code of 1991, states that local governments shall have a 40 percent share in the national internal revenue taxes.
Diokno earlier said the said SC decision will have some implications on the proposed PHP3.757 trillion national budget for 2019 but assured stakeholders that DBM will heed the decision once it becomes final. (Joann Villanueva/PNA)
