The Department of Finance (DOF) said fiscal consolidation and economic recovery will be very critical in preserving fiscal stability.
“The planned fiscal consolidation rests on shoring up tax revenues, winding down pandemic-related spending, and cutting non-priority expenditures. Also, in the light of the Supreme Court ruling on the Mandanas case, the devolution of pertinent functions to local government units (as enumerated in the LGU Code of 1991) will help ease the fiscal burden of the national government,” the DOF said in a statement.
The DOF also noted the need for structural measures, such as reforming the pension system of the military and uniformed personnel (MUP), to prevent the further buildup of pressure around “fiscal fault lines.”
“According to the 2021 Fiscal Risk Statement, the fiscal impact of the current MUP pension system is about P114 billion annually,” the agency added.
Earlier, the DOF said tax revenues in the first four months of the year rose by 12.1 percent to more than P1 trillion from a year ago.
“It is also up 13.6 percent from 2019, the last normal year before the pandemic struck,” the DOF said.
The Bureau of Internal Revenue’s collections topped P742.37 billion, up 7.8 percent from last year and 5.5 percent higher than the pre-pandemic period.
The Bureau of Customs’ revenues increased by 26.5 percent on the back of elevated fuel prices in the global markets.
Non-tax revenues, meanwhile, grew by 37.9 percent, partly contributing to the 14.6 percent growth in total revenues.
Expenditures over the period also rose by 6.6 percent, driven by a 24.7 percent increase in interest payments as the country started paying pandemic-related borrowings.
Allotment to local government units rose 18.1 percent following the implementation of the Supreme Court’s ruling on the Mandanas-Garcia case.
Other expenditures marginally dropped by 0.1 percent as the government winds down its pandemic-related spending.
The primary deficit, on the other hand, eased to P125.28 billion, down 42.1 percent over the same period last year.
“The overall deficit also declined by 14.8 percent. This favorable development enabled the National Government to pay one month ahead its advances from the Bangko Sentral ng Pilipinas,” the DOF said.
