State spending outpaced revenue growth in the first seven months of the year, pushing the national government’s (NG) fiscal deficit to ₱893.1 billion, 14 percent wider than the ₱784.4-billion shortfall recorded during the same period in 2025.

The NG’s latest cash operations report (COR) released by the Bureau of the Treasury on Thursday, Aug. 27, showed that total revenues as of end-July climbed 5.1 percent to ₱2.87 trillion from the ₱2.73 trillion collected during the same period in 2025.

Tax collections, which comprised 90.4 percent of total revenues, rose 5.7 percent to ₱2.59 trillion. Meanwhile, non-tax revenues for the seven-month period dipped marginally to ₱276.1 billion from ₱277 billion last year.

However, the double-digit year-to-date increase in the BTr’s income to ₱201.5 billion partially offset shortfalls in other non-tax sources.

Both the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC)—the country’s two main revenue collection agencies—reported growth.

Specifically, the BIR raked in ₱1.99 trillion, up 5.3 percent from a year ago. This improved performance was driven by “better taxpayer services to support stronger compliance and boost collection.”

Meanwhile, the BOC collected ₱583.4 billion, 7.3 percent higher year-on-year. This growth was driven by a significant increase in duties and value-added tax (VAT) collections from imports, “primarily due to the stronger United States (US) dollar and higher crude oil price.”

According to the BTr, the BOC’s collections also benefited from improved customs processes, stronger border protection, digitalization efforts, and closer coordination with stakeholders.

On the spending side, total expenditures as of end-July accelerated to ₱3.76 trillion, seven percent higher than the ₱3.52 trillion disbursed during the same period in 2025. Cumulative interest payments (IPs) accounted for ₱620.9 billion of the total, jumping 19.2 percent from ₱521 billion a year ago.

In July alone, the budget gap widened significantly to ₱106.3 billion from the ₱18.9-billion gap in July last year, as spending growth far outpaced revenue growth.

Tax collections in July remained healthy, with BIR collections up 6.9 percent to ₱358.4 billion and BOC collections up 7.5 percent to ₱91.6 billion.

Meanwhile, non-tax revenues fell 39.9 percent to ₱29.6 billion in July, mainly due to lower dividend remittances from the Bangko Sentral ng Pilipinas (BSP). The central bank remitted ₱3.4 billion to the government in July 2026, down from ₱18.9 billion a year ago.

July spending was pushed higher by a 19.8-percent year-on-year increase to ₱588.6 billion from ₱491.2 billion. - Derco Rosal