The Philippines recorded a slight increase in its budget deficit to 4.9 percent of the gross domestic product (GDP) driven by the widening gap between government spending and revenue collection.
Data from the Bureau of the Treasury revealed that the six-month budget deficit as a percentage of GDP rose marginally from the 4.8 percent average recorded in the first half of 2023.
However, the end-June fiscal deficit was significantly lower than the 6.2 percent deficit recorded in the previous year and also well below the 5.6 percent ceiling set by the Marcos administration for 2024.
From January to June, the government's fiscal deficit expanded by 11 percent year-on-year to reach P613.9 billion, driven by increased government spending despite recording double-digit revenue growth.
Concurrently, real GDP growth maintained a brisk pace, averaging 6.0 percent over the first two quarters, within the government’s target of 6.0 percent or 7.0 percent.
Although the government had initially projected a larger budget deficit of P661.8 billion for the first half of 2024, the actual deficit turned out to be 7.2 percent smaller than programmed.
Finance Secretary Ralph G. Recto said that the government's budget deficit remains "highly manageable" relative to the GDP.
Recto also said the Department of Finance (DOF) expects an average annual revenue growth of 10.3 percent over the medium term.
This growth trajectory is expected to elevate total revenues as a percentage of GDP from 16.1 percent in 2024 to 17 percent by 2028, he added.
In particular, Recto noted that tax collections are forecasted to surge by 11.8 percent annually, propelled by the double-digit growth in revenue collections from the Bureau of Customs and the Bureau of Internal Revenue (BIR).
The finance chief added that tax collection growth is projected to outstrip the approximately 8.7 percent average annual increase in the country's nominal GDP from 2024 to 2028.
“This means that we are asking the BIR and BOC to work harder and boost efficiency at a faster pace,” Recto said.
By 2028, the DOF expects the tax effort will rise to 16.3 percent from 14.4 percent in 2024.
“These projections took into account the additional revenues from the refined revenue reforms of the DOF, which we recalibrated to ensure that they do not place undue burdens on the taxpayers,” Recto said.