The Philippines' budget deficit in the second quarter of the year is expected to be lower than programmed P34.2 billion due to higher tax collections and slower spending, JPMorgan Chase and Company said Friday.

Matt Hildebrandt, JPMorgan economist, said there are several reasons to expect improvement in the government's fiscal position in the months ahead despite the higher than expected budget deficit in the first quarter.

Hildebrandt explained the government's spending is expected to have slowed in April due to election-related restrictions placed on the fiscal authorities.

“Lower spending combined with the boost to revenues that usually accompanies the April tax filing period should lead to a much smaller second-quarter deficit,” he said.

The economist also said that the country's gross domestic product growth rate in April to June is expected to expand 4.5 percent, significantly higher than the 2.6 percent forecast of the government.

“The government estimates that every 1 percentage point increase in GDP growth equates to a P13 billion increase in nominal revenue collections,” Hildebrandt said.

“So far, revenues from the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC) have come in higher than projected,” he added.

The Department of Finance had reported that the budget deficit in March came in at P63.9 billion, roughly twice as large as each of the deficits printed in the first two months of the year. (CSL)