The swell in the national government’s October budget surplus masked a softer fiscal picture amid the flood control corruption scandal.
Underpinned by sluggish revenue growth and restrained spending, the latest fiscal report is seen to signal a ‘weak fiscal impulse.’
Data released by the Bureau of the Treasury (BTr) on Wednesday showed that the budget surplus had surged to P11.2 billion in October, nearly 76 percent higher than a year ago.
This brought fiscal deficit to P1.11 trillion for the first 10 months, keeping the shortfall at 70.83 percent of the revised P1.56-trillion full-year target.
A budget surplus occurs when government revenues outpace expenditures. A deficit, on the other hand, is incurred when the state spends beyond its means.
‘Positive on paper’
The October surplus marks the first significant gain since April 2025 and mirrors last year’s performance, but economists warn that it does not necessarily signal real fiscal strength.
‘It reflects the effects of slower government spending rather than unusually strong revenues. With public works and some agency disbursements delayed due to the corruption probe and tighter scrutiny, expenditures fell faster than expected, creating a temporary surplus,’ said John Paolo Rivera, a senior research fellow at the state-run Philippine Institute for Development Studies (PIDS).
‘While a surplus may look positive on paper, it actually signals a weak fiscal impulse at a time when the economy needs government spending to support growth,’ Rivera added.
Ateneo de Manila University economist Leonardo Lanzona, said the surplus is an ‘unfavorable development,’ saying the slow revenue growth only came from tariffs.
‘Usually a budget deficit is not favorable, if the inflation had been increasing. But since inflation is declining, a budget deficit would have been the means to improve economic growth,’ he said.
‘Since [the corruption] also caused the decline in the GDP (gross domestic product) growth, this is an unfavorable development as the economy has relied heavily on government spending,’ Lanzona added.
Revenue drivers
Total revenues for the 10-month period reached P3.81 trillion, up just 1.13 percent from a year earlier following the non-recurrence of last year’s extraordinary non-tax receipts.
Tax revenues grew a modest 7.45 percent, driven mainly by the Bureau of Internal Revenue, which posted a 9.55-percent increase to P2.65 trillion.
The Bureau of Customs, for its part, barely exceeded last year’s level with a 0.91-percent uptick to P784.6 billion.
Non-tax revenues, meanwhile, plunged by nearly 37 percent from last year, underscoring the government’s heavier reliance on tax collections as last year’s one-off windfalls disappeared.
Still, collections have already exceeded the revised P306.5 billion program for the year.
Restrained spending
On the spending side, expenditures rose only 3.9 percent, only 80.8 percent of the P6.08 trillion revised full-year program. Primary expenditures, on the other hand, inched up by 2.45 percent since last year. This comes as infrastructure outlays weakened amid the flood control corruption probe.
The softer pace of spending helped produce the October surplus but also highlighted government underspending at a time when agencies were expected to accelerate program implementation.
According to Rivera, the slow disbursement could further weigh on the GDP, which already slowed to a four-year low of 4 percent in the third quarter.