Statement of Finance Secretary Cesar V. Purisima on January-October 2012 Fiscal Performance

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Revenues surge 29.2% year-on-year in October

Ten-month fiscal deficit at P115.736 billion with revenues up 11.8% and spending up 14.5%

“THE GOVERNMENT collected P134.320 billion in October, soaring 29.2% from the last year and bringing the ten-month aggregate revenue to P1.253 trillion. This is the second highest monthly growth for the year.

“The fiscal deficit for the first ten months of the year amounted to P115.736 billion, with revenues up 11.8% and expenditures rising 14.5% to P1.369 trillion. This resilient performance from both sides of the national ledger greatly reduces the risk of fiscal slippage by year-end, as it is well within the full year deficit program of P279.106 billion.

“Netting out interest payments, the administration still operates at a primary surplus of P150.953 billion. The government operated at a primary surplus of P11.766 billion October this year, against the primary deficit of P8.6 billion of October last year.

2012 1Q-3Q revenue effort higher at 14.7%

“As of third quarter this year, the government’s revenue effort increased to 14.7%, higher than the 14.5% recorded last year. The Aquino administration’s prudent fiscal management has maintained ample fiscal space to spend for inclusive growth, maintaining a deficit-to-GDP ratio at 1.4%, well within the 2.6% full-year program.

“The 1Q-3Q national government tax effort also increased to 13.1%, against the previous year’s 12.7%. This is driven by the 0.4% improvement in the Bureau of Internal Revenue’s revenue-to-GDP ratio, now at 10.2%.

BIR and BOC surge double-digits concurrently for fourth month

“October is the fourth month this year where both major collection units grew double-digits simultaneously, driven by the growth of the cash component of collections. These are dividends of prudent fiscal management and efforts to preserve revenue integrity.

“The BIR collections surged 22.1% in October with P86.105 billion, while the Bureau of Customs (BOC) collections soared 17.9% with P26.934 billion. This is the seventh time that BIR registered double-digit monthly growth and the fifth time for BOC.

“Both major collection bureaus’ monthly collections have consistently exceeded that of the previous year’s.

“For the month of October, the cash component of BIR registered a 23.1% upsurge to P83.512 billion, while the BOC cash component recorded a 23.2% growth to P26.797 billion.

“The Bureau of Treasury also notably grew 140.1% in October, raking in P6.298 billion. This year Treasury has consistently performed above target on the aggregate levels.

“With our 3rd quarter GDP growth at 7.1% going beyond market expectations and placing us above most of our Asian peers, and our 11.8% revenue growth outpacing combined GDP growth and inflation, we are confident that we are reaping the dividends of President Aquino’s good governance reforms.

“This economic performance is significant for several reasons. One, it is much higher than the trend GDP growth of 4.7% in the past ten years. Two, it was accomplished in a very difficult global economic environment. And three, it happened despite a 2.2% decline in mining, which shows that mining represents an extra gear for the Philippine economy once the regulatory environment is rationalized. The peace agreement once completed and fully implemented represents another extra gear that will unlock the significant potential of Mindanao.

“While the current fiscal space continues to be an opportunity for the judicious use of public funds for projects of high and inclusive growth, the Finance Department continues to push for revenue-generating reforms that will allow for sustainable and resilient fiscal consolidation.

“The Senate last November 20 passed on third and final reading the excise tax reform bill on tobacco and alcohol, which will generate P40 billion in incremental revenues in the first year of implementation. It also provides moderate tax increases to protect the young and the poor from the ill effects of smoking and excessive drinking, and in five years will allow the country to come close to the excise tax burden on tobacco products recommended by the World Health Organization and the World Bank.

“The department will continue to work with our partners in the legislative branch at the bicameral conference committee to ensure we maximize the health and revenue gains at this critical last juncture of this urgent reform measure.