In stark contrast to the persistent budget deficit of the national government, the Department of Finance (DOF) has projected yet another budget surplus for local government units (LGUs) next year.

Based on the DOF's program on the consolidated public sector financial position, the general government, consisting of the national government, LGUs, and state-owned companies, is projected to incur a deficit of P890.38 billion in its overall budget balance in 2024.

The public sector's aggregate budget deficit, which is 12 percent lower than the projected P1.012 trillion shortfall for this year, is primarily attributed to the national government's fiscal gap.

For 2024, the DOF expects a P1.356 trillion budget deficit for the national government. This, however, is an improvement compared to the P1.499 trillion program for 2023.

While the national government grapples with financial constraints, the LGUs are reveling in a budget surplus where funds seem to overflow at their disposal.

This is largely due to the Supreme Court's Mandanas-Garcia ruling granting LGUs a larger share of national tax collections. With that, local governments are expected to close the year 2024 with a budget surplus of P173.99 billion.

However, this projected surplus is 25 percent lower compared to the program set at P232.51 billion for 2023.

The proposed budget for 2024 includes a National Tax Allotment of P871.38 billion allocated to LGUs. This amount was derived from the national government's tax collection in 2021, a time when the economy was still rebounding from the effects of the pandemic.

For 2024, the pension funds namely the Social Security System, Government Service Insurance System, and the Philippine Health Insurance Corp., are expecting surpluses amounting to P236.84 billion, higher than the target of P177.46 billion set for 2023.

Also, other government financial institutions (GFIs) are forecasting surpluses of P47.45 billion, a slight increase compared to the targeted P43.57 billion for this year.

Meanwhile, the Bangko Sentral ng Pilipinas is anticipated to maintain a budget surplus of P1 billion for both the current and upcoming years.

The consolidated public sector fiscal position is a measure of a country's credit risk. It takes into account the combined budget deficits or surpluses of the national government, government-owned corporations, LGUs, GFIs, and social security institutions.