The national government (NG) swung back to a budget deficit in May, with the fiscal gap widening from a year earlier as the sharp decline in non-tax revenue overshadowed solid tax gains and the modest increase in state spending.

According to the latest cash operations report (COR) released by the Bureau of the Treasury (BTr) on Thursday, June 25, the Marcos administration posted a fiscal deficit of ₱198.5 billion last month, 36.7 percent higher than the ₱145.2 billion recorded in May 2025.

This wider deficit was primarily driven by the 7.24 percent decline in total revenues to ₱401.7 billion from ₱433.1 billion a year ago, while spending inched up by 3.8 percent to ₱600.2 billion from ₱578.2 billion.

Despite the overall revenue dip, tax collections grew by 12.2 percent to ₱362.3 billion from ₱322.9 billion a year ago. This growth was fueled by the Bureau of Internal Revenue (BIR), which saw collections jump 15 percent to ₱279.1 billion from ₱242.7 billion last year.

Meanwhile, the Bureau of Customs (BOC) collected ₱80 billion in May, up 5.7 percent from ₱75.7 billion a year ago.

According to the Treasury, the improvement was “driven by enhanced valuation practices and strengthened revenue collection measures, which helped offset the impact of lower import volumes and the temporary suspension of excise taxes on LPG and kerosene.”

Standing in stark contrast were non-tax collections, which plummeted by nearly two-thirds to ₱39.4 billion from ₱110.2 billion last year.

The BTr explained that this decline was due to the timing of government-owned and -controlled corporation (GOCC) dividend remittances, which shifted receipts to earlier months, as well as high base effects from one-off receipts in May 2025, such as proceeds from the Bases Conversion and Development Authority (BCDA).

Meanwhile, the government’s higher disbursements in May were driven by increased interest payments, which jumped by a fifth to ₱84.6 billion, as well as higher National Tax Allotment (NTA) shares for local government units (LGUs), the BARMM annual block grant, and Local Government Support Fund (LGSF) releases.

Expenditures were also pushed up by direct payments from development partners for foreign-assisted rail transport and road infrastructure projects.

For the first five months of 2026, the government’s cumulative budget deficit narrowed slightly to ₱522.5 billion from ₱523.9 billion a year ago.

Total revenues from January to May reached ₱2.07 trillion, a 6.2 percent increase from the ₱1.95 trillion collected in the same period last year. During the same five-month period, total expenditures rose 4.8 percent to ₱2.60 trillion from ₱2.48 trillion.

Tax collections accounted for 88.8 percent of the five-month revenue total at ₱1.84 trillion, up 5.1 percent year-on-year. End-May non-tax revenues grew to ₱231.4 billion, 15.2 percent higher than last year, supported by a higher cumulative total of dividend remittances.

The BIR’s five-month collections rose 4.9 percent to ₱1.42 trillion, while the BOC’s cumulative take increased by 6.3 percent to ₱405.7 billion compared to the first five months of 2025. (Derco Rosal)