The Department of Finance (DOF) expects the consolidated public sector deficit (CPSD) to decrease to P603.85 billion next year from P730.32 billion this year.
Data from the DOF showed that the decline in the deficit will be driven by higher budget surpluses of local government units (LGUs) and state-run entities.
The CPSD next year is projected to be equivalent to 2.1 percent of the country's estimated gross domestic product, lower than the 2.8 percent in 2024.
In 2025, the national government's budget deficit is expected to reach P1.538 trillion, higher than the P1.417 trillion ceiling for 2024.
However, LGUs and certain government-owned and controlled corporations (GOCCs) are expected to record budget surpluses in 2025, offsetting the government deficit and reducing the CPSD.
The Social Security System (SSS), Government Service Insurance System (GSIS), and Philippine Health Insurance Corp. (PhilHealth) are forecasted to have a total surplus of P360.7 billion.
The projected surplus from these three GOCCs is 13 percent higher than this year's surplus of P319.53 billion.
LGUs are expected to finish 2025 with budget surpluses of P455.95 billion, a significant 47 percent increase from this year's program of P310.6 billion.
The Bangko Sentral ng Pilipinas and other government financial institutions are also expected to have surpluses of P1 billion and P64.4 billion, respectively.
CPSD encompasses the combined budget positions of the national government, GOCCs, government-owned banks and financial institutions, social security institutions, the central bank, and LGUs.
It is closely monitored by local and foreign debt watchers as an indicator of a country's credit risk.