Despite rosy claims, government missed all 2015 targets

The government missed all of its fiscal targets last year, despite the glowing claims of the Aquino administration on “fiscal space” resulting from its “prudent management” of the government’s finances. 

In the annual report of the Bangko Sentral ng Pilipinas (BSP), the government reported revenues of P2.11 trillion, which was 7.3-percent short of the P2.27-trillion target, although10.5 percent higher than last year’s.

On expenditures, the government posted P2.23 trillion, which was 12.8 percent off the P2.56-trillion goal for last year.

The Bureau of Internal Revenue (BIR) collected P1.43 trillion, which was 14.4 percent less than its target of P1.67 trillion, although 7.4 percent higher than last year’s. The Bureau of Customs (BOC) was 15.8 percent short of its target, collecting P367.5 billion last year against its P436.6-billion target.

On government spending, while allotment for local government units overshot the target by 24.3 percent to 387.6 billion against a P311.9- billion target, interest payments and equity and net lending both contracted.

Finance Secretary Cesar Purisima, however, said in a statement that the budget incurred a 0.9-percent deficit for last year that resulted in the government “being able to finance a better future that is a direct result of President Aquino’s good governance drive.”

The budget ended the year with a deficit of P121.7 billion for 2015, as both revenues and expenditures expanded by 11 percent and 13 percent, respectively, Purisima said.

“Netting out interest payments, the primary balance for 2015 was at a surplus of P187.7 billion, 140 percent or P109.5 billion above target,” Purisima said.

“For the past five years, consistently prudent and strategic fiscal management has afforded Filipinos a better future. Today, we have more fiscal firepower for multigenerational investments in our people, weaving stronger social safety nets and better connectivity links across the archipelago,” he said. “This is the direct result of good governance–a marked break from the past that we ought to continue towards the next administration.”

Government records showed the tax-to-gross domestic product (GDP) ratio, which is a measure of the efficiency of revenue collection, improved to 13.7 percent, as revenues sustained robust growth.

Purisima said the improvement of the country’s tax-to-GDP ratio was the result of “strong revenue collection,” amounting to P2.1 trillion for the year, higher by P200.4 billion compared to the previous year.

The Department of Finance (DOF) reported that the December revenue collections amounted to P163.5 billion, with the BIR contributing P1.4 trillion for the year, which was P98.5 billion higher than the 2014 figures.

The BoC raised P367.5 billion resulting in a flat growth that Purisima said was the result of the price of oil falling to record lows in 2015; collections on oil sagged by as much as 31 percent. But this was compensated for by non-oil collections, up 9.3 percent from year-ago levels, he said.

“President Aquino will perhaps be remembered in history as one of the few leaders who have managed to significantly expand fiscal space without imposing any new income- or value-added tax (VAT) increases on his people,” Purisima said.

“We have almost doubled government tax revenues in six years through tax administration and enforcement reforms to improve collections and passing a landmark “sin” (or excise) tax reform law last 2013,” the finance secretary said.

Purisima also said the government “reduced interest rates that bolstered confidence in the country’s credit rating, and reduced corruption in various levels of the bureaucracy, proving that good governance can, indeed, deliver solid wins in our balance sheet” for the people.

“The next administration may very well consider engaging in genuine, comprehensive reform of the tax structure, but better tax administration and enforcement must continue to be integral to the nation’s revenue growth strategy,” Purisima said.

The December collections for the BIR and the BoC amounted to P106.3 billion and P37.8 billion, respectively.

The Bureau of the Treasury reported generating an income of P110 billion for 2015, 81 percent or P49.4 billion above program and 18 percent or P16.6 billion year-on-year.

“The Treasury has been consistently performing in top shape, attuned to the global market and striking at the most opportune time. Our people now have a more resilient and healthy debt profile helping, and no longer hurting, our macroeconomic standing,” Purisima noted.

Interest payments-to-expenditure ratio fell to 13.9 percent from 16.2 percent a year ago; government expenditures in 2015 amounted to P2,230.6 billion, widening by 13 percent or P249.0 billion year-on-year.

December disbursements stood at P238.7 billion, which is 7 percent or P15.6 billion above program and 9 percent or P19.3 billion better than year-ago figures, Purisima said.

Total interest payments for 2015 reached P309.4 billion, generating savings of P52.5 billion if compared with the P361.8 billion program for the year.

This is 4 percent or P11.8 billion lower than payments made last year.

“As a percentage of expenditures, interest payments fell by 2.3 percentage points to 13.9 percent for the year from 16.2 percent the year prior. Persistent narrowing of our interest payments to expenditure ratio means we have much more money available for productive expenditures,” Purisima added.

He also sounded a cautiously optimistic note for the years ahead, saying, “Filipinos have demography, natural resources, and talent on their side. There is no reason we can’t succeed if we stick to our unwavering commitment to good governance. Over the past six years we have cleaned up and strengthened our institutions, the key ingredient of successful economies. While the work is far from over, today we move ever forward on firmer fiscal footing,” he said. LUIS LEONCIO