THE NATIONAL Government’s (NG) budget shortfall surged to P241.6 billion in June as government expenditures exceeded revenue collections, as reported by the Bureau of the Treasury (BTr) on Thursday.
Information from the Treasury indicated that the Philippines’ budget deficit expanded by 15.56% to P241.6 billion in June, up from P209.1 billion during the same month a year ago.
On a month-on-month basis, the budget deficit increased by 66.46% from P145.2 billion in May.
In June, government spending rose by 8.49% to P548.5 billion from P505.6 billion in June 2024.
The BTr credited the accelerated spending to larger National Tax Allotment shares for local government units, the annual block grant to the Bangsamoro Autonomous Region in Muslim Mindanao, personnel services, and interest expenses.
Core spending — which denotes total expenditures excluding interest payments — climbed by 9.14% to P491.1 billion in June, compared to P450 billion last year. This constituted 89.53% of total disbursements for June.
Interest costs rose by 3.19% to P57.4 billion in June this year from P55.6 billion in the same month in 2024.
The NG’s primary deficit was recorded at P184.2 billion in June, representing a 20.04% increase from P153.4 billion in June of the previous year.
In contrast, revenue collections saw a 3.5% increase to P306.9 billion in June from P296.5 billion in the same month last year.
“The continued double-digit rise in tax revenues mitigated the elevated base effect of one-time remittances under nontax revenues last year,” stated the BTr.
Tax revenues rose by 12.35% to P280.1 billion in June compared to P249.3 billion during the same month in 2024.
A large portion came from the Bureau of Internal Revenue (BIR), which garnered P200.5 billion in June, an increase of 16.24% from P172.5 billion at the same time last year.
Collections by the Bureau of Customs (BoC) increased by 3.23% to P77 billion, while revenues from other offices rose by 16.71% to P2.6 billion.
Conversely, nontax revenue plummeted by 43.25% year on year to P26.8 billion in June “due to the high base effect of one-off remittances in 2024.”
The BTr’s revenues soared by 116.49% to P16.1 billion in June from P7.4 billion a year prior, attributed to the NG’s larger share of profits from the Philippine Amusement and Gaming Corp. and dividend remittances from the Power Sector Assets and Liabilities Management Corp.
Income from other offices fell by 73.04% to P10.7 billion in June.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort mentioned that the budget deficit in June was the largest in three months since March.
“Budget deficits may escalate the need for further borrowings from a cash flow perspective,” he remarked.
FIRST-HALF GAP
In the initial six months of the year, the NG budget deficit expanded by 24.69% to P765.5 billion from the P613.9-billion gap recorded last year.
The BTr noted that the budget deficit stayed relatively on target, being 0.63% above the planned P760.7 billion for the first half.
Revenue collection in the first six months rose by 5.15% to P2.26 trillion, compared to P2.15 trillion during the same timeframe in 2024. This was 0.89% lower than the projected P2.28 trillion for the half-year period.
Tax revenues increased by 10.74% to P2.03 trillion as of end-June, which is 1.3% below the P2.06 trillion program.
BIR collections grew by 14.11% to P1.55 trillion as of end-June, mainly propelled by increases in corporate income tax, value-added tax, and personal income tax. However, this was 1.52% below the P1.58-trillion program.
“Additional sources of increased revenue stemmed from higher excise tax collections on tobacco, including electronic cigarettes, due to the Bureau’s ongoing efforts to intensify the fight against the illicit tobacco trade and the strict enforcement of mandatory excise tax stamps on vapor products,” it noted.
Increased percentage tax collections from banks and financial institutions also contributed to enhancing BIR revenues.
The BoC collection marginally grew by 0.71% to P458.8 billion as of end-June, though still 0.58% below the P461.4-billion program.
Nontax revenues plummeted by 27.53% to P227.7 billion in the January-to-June period. It exceeded the P221.4 billion program by 2.87% due to better-than-target income from the BTr.
Treasury income dipped by 11.37% to P145.3 billion in the first half, while income from other offices contracted by 45.14% to P82.5 billion.
Meanwhile, government spending rose by 9.49% to P3.03 trillion as of end-June, up from P2.76 trillion a year past. It was just 0.51% lower than the P3.04-trillion disbursement program for the timeframe.
Core expenditures climbed by 9.41% to P2.61 trillion as of end-June, while interest payments rose by 9.97% to P414.8 billion.
In the first half, the NG’s primary deficit elevated by 48.16% to P350.7 billion. It surpassed the first-half program of P343.7 billion by 2.04%.
“Even though interest payments increased, the majority of the deficit growth can be linked to elevated expenses due to government initiatives and disbursements to local government units,” stated Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc.
“The budget deficit can still be managed as revenue collection remains robust and debt obligations are growing at a moderate pace. Provided that each expenditure results in enhanced productivity, the deficit may still be manageable,” he concluded.
For this year, the NG’s deficit limit is set at P1.56 trillion or 5.5% of gross domestic product. — Aubrey Rose A. Inosante