THE national government’s budget deficit expanded to P1.117 trillion as of the end of September, but still came in lower than the fiscal program.
Latest data from the Bureau of the Treasury (BTr) showed the shortfall increased by 15.15 percent to P1.117 trillion from January to September this year, from P970.2 billion in the same period last year.
Despite the wider gap, it remained 11.04 percent below of the government’s deficit target of P1.255 trillion for the nine-month period.
Revenues collected reached P3.366 trillion in the third quarter, up by 2.24 percent from P3.292 trillion a year ago.
However, this was marginally lower by 0.55 percent from the P3.385-trillion revenue goal set by the government.
Expenditures, meanwhile, grew by 5.18 percent to P4.484 trillion from the P4.263 trillion recorded in the third quarter last year.
This figure is also lower than the government’s spending target of P4.641 trillion during the period by 3.39 percent.
‘Narrower fiscal deficit in 2025’
According to BMI, a Fitch Solutions Company, the Philippines could see its fiscal deficit to slightly shrink to 5.5 percent of gross domestic product (GDP).
This is on the back of the government bringing in more revenues and lower spending due to the election spending ban and weak infrastructure disbursements.
‘Although we expect the spending shortfall to narrow, expenditure will probably end up undershooting the 2025 budget,’ BMI said, citing Budget Secretary Amenah F. Pangandaman’s warning that government spending may slow as investigations into alleged corruption intensify.
For 2026, BMI said fiscal consolidation-the government’s effort to reduce its deficit-will remain slow, with only a slight narrowing of the deficit to 5.4 percent of GDP
With next year’s national budget set at P6.793 trillion, BMI said tax revenue collections ‘will not keep up with spending’ since plans to expand the tax base are ‘feeble at best’ so far.
‘Furthermore, the US-Philippines trade deal is expected to further reduce import duties collected from US exports,’ it added, citing the Bureau of Customs’ (BOC) projection of P30 billion in foregone tax revenues.
The narrower deficit projected for 2026 will be partly due to one-time revenues from the sale of state assets, which could yield 0.3 percent of GDP.
‘We think that this is fiscally unfeasible over the long run. The Philippines’ public finances remain fragile,’ BMI said.
With the country’s debt-to-GDP ratio increasing to 60 percent from the prepandemic level of 40 percent, BMI said this puts the Philippines among ‘regional laggards in fiscal recovery.’
‘Elevated borrowing costs and a narrow revenue base further limit Manila’s ability to deliver large-scale fiscal support without compromising debt sustainability,’ it added.
Sept budget gap
In September alone, the budget gap narrowed by 9.22 percent year-on-year to P248.1 billion from P273.3 billion.
The government generated P281.7 billion in revenues, lower by 5.99 percent from P299.7 billion last year.
Tax revenues raised by the Bureau of Internal Revenue (BIR) and BOC rose to P265.9 billion, up by 4.91 percent from P253.4 billion in the previous year.
However, non-tax revenues plunged by 65.78 percent year-on-year to P15.8 billion from P46.2 billion due to the base effect of extraordinary non-recurring remittances from last year.
Expenditures also dropped by 7.53 percent to P529.8 billion from P572.9 billion in the same month a year ago.
BTr attributed the decrease to the lower spending performance of the Department of Public Works and Highways (DPWH), following the agency’s ongoing validation of the status of completed projects and strict verification of progress billings and payments claims.
However, the contraction was slightly offset by the sizable increases in interest payments and allotment to local government units due to the higher National Tax Allotment shares for 2025.
‘While some DPWH projects faced implementation challenges, the government has in place catch-up measures to keep overall spending aligned with the government’s priorities and ensure that expenditures continue to drive economic growth,’ the BTr added.