REOPENING OF ECONOMY. Higher economic activities as a result of further reopening of the economy helped boost government revenues, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said. The Department of Finance (DOF) reported on Friday (March 17, 2023) the PHP45.749 billion budget surplus in the first month this year, a turn-around from the PHP23.38 billion budget deficit same period in 2022. (Photo courtesy of RCBC)
MANILA – The reopening of the economy, which allowed increased activities, has contributed to the improvement of the government’s revenues and resulted to a budget surplus in January 2023, an economist said.
Data released by the Department of Finance (DOF) on Friday showed a budget surplus of PHP45.75 billion last January, a turn-around from the PHP23.38 billion budget deficit same period in 2022.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort, in a reply to questions from the Philippine News Agency, said the government’s decision to further reopen the economy helped lift government revenues since this led to higher economic activities and sales among businesses “that fundamentally increased the government’s tax revenue collections.”
“Disciplined government spending amid the need to further bring down the debt-to-GDP (gross domestic product) ratio also supported the better budget surplus data compared to a year ago, especially with no more large lockdowns (that entailed large government expenditures at the height of the pandemic/lockdowns from 2020-2021) since November 2021,” he said.
Government data shows that revenues in the first month of this year rose by 25 percent year-on-year to PHP348.17 billion from year-ago’s PHP278.1 billion.
Spending was little changed at PHP302.42 billion compared to the PHP301.46 billion a year ago.
Ricafort said fiscal reform measures such as the proposed rightsizing of the government will help reduce spending and increase productivity.
He also said that measures to increase collections through tax reforms is good but this is not the right time given that domestic inflation remains elevated.
“More tax revenue collections due to improved business and economic activities as the economy reopened further towards greater normalcy, as also supported by faster economic growth, would help sustain favourable fiscal performance, with a bigger tax base that would also help reduce the country’s debt-to-GDP ratio,” he added. (PNA)
