While the ₱67.3-billion surplus seen in April shifted to a shortfall last month, the Philippine government’s budget deficit in May was narrower at ₱145.2 billion, compared to ₱174.9 billion a year earlier, as robust revenue collections surged while spending growth slowed during the midterm election season.

According to the Bureau of the Treasury (BTr), this narrower budget shortfall was mainly because revenue collections were robust during the period, with 13.4-percent growth. This came alongside a slowdown in spending growth to 3.8 percent during the month when national and local elections were held.

Given this, the government said it “remains on track to meet its deficit target for the year through prudent fiscal management and efficient use of resources,” in line with its medium-term fiscal program.

Total revenue collections hit ₱433.1 billion in May, up 13.4 percent from a year ago, driven by strong gains in both tax and non-tax revenues.

Tax revenues accounted for most of the total at ₱1.75 trillion, growing by 10.5 percent. The Bureau of Internal Revenue (BIR), the country’s top tax-collection agency, brought in ₱242.7 billion in May, a 10.7-percent increase from last year.

“This increase was primarily driven by corporate income tax (CIT), followed by personal income tax (PIT), excise tax on tobacco products, taxes on government securities, and taxes on banks and financial institutions,” the BTr said.

The BTr cited the BIR’s stronger collection drive, tougher action against fake transactions, ongoing digital upgrades, and continued crackdown on illegal tobacco trade as key reasons for the improved performance in May.

Meanwhile, the Bureau of Customs (BOC), the country’s second-largest revenue agency, collected ₱75.7 billion, down 6.9 percent.

This decline, according to BTr, was “due to the impact of reduced tariffs, particularly on rice and battery-powered electric vehicles (EVs).” Despite this, the BTr said that “the BOC remains committed to enhancing its revenue strategies and identifying new measures to offset these effects.”

On the other hand, non-tax revenues jumped 40.9 percent to ₱110.2 billion in May, boosted by bigger dividend remittances from government-owned and/or -controlled corporations (GOCCs).

Government spending in May climbed by 3.8 percent from the ₱557 billion recorded in the same month last year.

According to the BTr, the increase was mostly driven by higher interest payments, larger national tax allotment (NTA) releases to local government units (LGUs), and the Annual Block Grant for the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), along with the implementation of the second salary increase for eligible civilian government workers under Executive Order (EO) No. 64.

Primary spending reached ₱508.3 billion in May, increasing by 2.5 percent from a year ago. It accounted for 87.9 percent of total disbursements.

Interest payments (IPs) in May totaled ₱70 billion, rising 14.5 percent year-on-year on higher coupon payments for both domestic and foreign debt.

From January to May, the deficit hit ₱523.9 billion, up 29.4 percent from a year ago, as the government ramped up spending on infrastructure and social programs to drive inclusive growth.

Tax and non-tax revenues stood increased by 5.4 percent year on year ₱1.95 trillion, The BTr said this keeps the government “on track to achieve its targets for 2025.”

The BIR’s collections for the first five months rose to ₱1.35 trillion, up 13.8 percent from a year earlier. The BOC’s collections for the first five months edged up to ₱381.7 billion, slightly higher than a year ago.

Non-tax collections reached ₱200.9 billion, down 24.8 percent year-on-year, mainly due to several one-off remittances in 2024.

As for spending, total government disbursements hit ₱2.48 trillion, up 9.7 percent from the previous year.

Primary expenditures increased to ₱2.12 trillion, up 9.5 percent from a year ago, while IPs reached ₱357.4 billion, rising 11.1 percent compared to the end-May 2024 level.