The national government’s fiscal position swung to a substantial surplus in January this year as the Marcos administration aggressively reined in spending following a year of missed budget targets.

Data from the Bureau of the Treasury (BTr) showed that the national government posted a budget surplus of ₱165.4 billion in the first month of 2026, more than doubling the ₱68.4 billion recorded in the same period last year,

Total revenues for the month reached ₱468.9 billion, a slight increase from the ₱467.1 billion collected in January 2025. This growth was driven by tax collections, which made up 94.5 percent of the total.

Of the total tax receipts, the Bureau of Internal Revenue (BIR) contributed ₱358.7 billion, an increase of one percent from the previous year. This modest expansion in the collection of the country’s main tax collection agency was driven by digitalization efforts and “intensified” tax administration.

Similarly, the Bureau of Customs (BOC), the country’s second-largest tax-collection arm, posted ₱80.9 billion, representing a 2.1 percent increase.

This positive outturn was “buoyed by its sustained enforcement operations, including the seizure of smuggled goods, the confiscation of illegally imported vehicles, and strengthened compliance and tax administration measures.”

These gains helped offset the 12.1 percent decline in non-tax earnings, which fell to ₱26 billion from ₱29.6 billion in January 2025. The Treasury blamed this double-digit contraction on a moderation in its own income and a lower government share from Malampaya proceeds.

On the expenditure front, government spending fell sharply by 23.9 percent, to ₱303.5 billion from ₱398.8 billion a year earlier.

According to the BTr, this substantial drop was primarily due to the rescheduling of transfers to local government units (LGUs).

It also cited the base effect from January 2025, which saw large capital disbursements to settle accounts payable and front-load expenditures ahead of an election ban.

Recall that the Marcos administration closed 2025 with a ₱1.58 trillion fiscal deficit, wider than the ₱1.51 trillion gap in 2024 and exceeding the ₱1.56 trillion target for the year. This was due to sluggish revenue growth and a tax collection shortfall.

Meanwhile, the full-year fiscal deficit exceeded the 5.5 percent target by one percentage point (ppt). Despite the overshoot, the BTr said the deficit-to-gross domestic product (GDP) ratio slightly improved to 5.6 percent from 5.7 percent in 2024.

Fitch Ratings, a global debt watcher, said the Philippines’ pursuit of an A-level sovereign credit rating could face delays if oil-related uncertainty persists, potentially stalling the Marcos administration’s efforts to narrow its budget deficit.

Earlier this year, Fitch maintained its ‘BBB’ rating with a stable outlook despite the Philippines' difficulty in narrowing its fiscal deficit and reducing its debt, as high interest costs and governance issues continue to weigh on its credit profile.