{"id":17293,"date":"2025-10-24T02:45:34","date_gmt":"2025-10-24T00:45:34","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=17293"},"modified":"2025-10-24T02:45:34","modified_gmt":"2025-10-24T00:45:34","slug":"fiscal-gap-narrows-amidst-decelerating-expenditures","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/10\/24\/fiscal-gap-narrows-amidst-decelerating-expenditures\/","title":{"rendered":"“Fiscal Gap Narrows Amidst Decelerating Expenditures”"},"content":{"rendered":"

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By Katherine K. Chan<\/b><\/p>\n

THE Philippines\u2019 budget shortfall <\/span>declined in September, the Bureau of the Treasury (BTr) announced on Thursday, as investigations into flood control schemes restrained government expenditures.<\/p>\n

The financial gap decreased by 9.22% year on year to P248.1 billion, while month on month, it almost tripled from August\u2019s P84.8-billion deficit. Overall government expenditure fell 7.53% to P529.8 billion compared to the previous year, reflecting a slowdown in project execution.<\/p>\n

Core expenses \u2014 total outlay excluding interest payments \u2014 decreased by 10.22% to P448.1 billion, whereas interest payments increased by 10.63% to P81.7 billion.<\/p>\n

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Revenue collection also declined, dropping 5.99% to P281.7 billion as nontax receipts fell by nearly two-thirds. Treasury earnings decreased by 21.73% to P7.8 billion, while revenue from other offices plummeted by 77.82% to P8 billion.<\/p>\n

Tax revenues offered some respite, rising 4.91% year on year to P265.9 billion. The Bureau of Internal Revenue (BIR) garnered P183 billion, an increase of 4.74%, while the Bureau of Customs (BoC) revenue grew by 5.25% to P80.3 billion.<\/span><\/p>\n

The primary shortfall, excluding interest payments, narrowed by 15.67% to P166.4 billion.<\/p>\n

The reduced gap likely indicated postponed public outlays \u201cparticularly in infrastructure amidst ongoing inquiries into flood control expenditures,\u201d noted John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, in a Viber message.<\/p>\n

From January to September, the budget deficit expanded by 15.15% year on year to P1.117 trillion, or 71.6% of the government\u2019s P1.56-trillion target for the entire year. Expenditures increased by 5.18% to P4.484 trillion \u2014 approximately 73.7% of the P6.082-trillion spending agenda.<\/p>\n

Primary expenditure during this period rose by 3.76% to P3.818 trillion, while interest payments surged by 14.15% to P665.8 billion.<\/p>\n

Revenue climbed by 2.24% to P3.367 trillion, equating to 74.49% of the P4.52-trillion objective. Tax collections rose by 8.56% to P3.053 trillion, whereas nontax revenues decreased by 34.71% to P314.1 billion.<\/p>\n

The BIR collected P2.323 trillion, a 10.88% increase, and Customs\u2019 revenue increased by 1.59% to P701.7 billion. The Treasury attributed improved tax performance to heightened corporate and personal income taxes, alongside increases in value-added, tobacco, and banking taxes.<\/p>\n

Despite the decrease, nontax revenues have already surpassed their full-year target, backed by dividends from state enterprises and earnings from gaming and airport activities.<\/p>\n

As of September, the primary shortfall had increased by 16.66% to P451.4 billion.<\/p>\n

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., indicated that expenditures could remain muted due to enhanced oversight of government contracts.<\/p>\n

\u201cThere is a risk of diminished government spending in the upcoming months due to anti-corruption initiatives that may impede economic progress,\u201d he stated in a Viber message.<\/p>\n

Mr. Rivera remarked that the sustainability of a reduced deficit is uncertain. \u201cWhile decreased spending might momentarily improve the statistics, it cannot replace revenue growth or robust public investment,\u201d he added.<\/p>\n

BMI, a division of Fitch Solutions, anticipates the Philippines\u2019 budget deficit to slightly decrease this year as expenditures remain limited by election-associated restrictions and sluggish infrastructure disbursements.<\/p>\n

It forecasts the fiscal shortfall to reach 5.5% of gross domestic product (GDP), aligning with the cap established by the Development Budget Coordination Committee (DBCC). This would signify a slight enhancement from last year\u2019s 5.7%.<\/p>\n

\u201cWe project a narrower Philippine fiscal deficit of 5.5% for 2025 as spending has lagged behind the projected expenditures in the fiscal plan,\u201d BMI indicated in an October 22 report.<\/p>\n

Government revenue collection as of August had surpassed monthly aspirations, yet expenditures continued to lag due to restrictions on pre-election payments and a slowed rollout of infrastructure projects.<\/p>\n

Budget Secretary Amenah F. Pangandaman previously warned that infrastructure spending might decelerate as the Department of Public Works and Highways confronts investigations over anomalies in flood control projects.<\/p>\n

BMI anticipates the fiscal gap to diminish further to 5.4% next year, aided by one-off privatization revenues and new trade agreements with the US. However, this estimate is slightly above the DBCC\u2019s 5.3% aim.<\/p>\n

The report highlighted that tariff concessions under the US-Philippines trade agreement could decrease government revenue by as much as P30 billion, following Manila’s commitment to eliminate duties on select American imports such as vehicles, pharmaceuticals, and soybeans.<\/p>\n

Customs Commissioner Ariel F. Nepomuceno previously stated that the government could incur a revenue loss of P27 billion to P30 billion this year due to the no-tariff policy.<\/p>\n

BMI added that the suggested P6.793-trillion budget for 2026 could pressure fiscal consolidation efforts, given that plans to expand the tax base remain constrained.<\/p>\n

The administration seeks to maintain the deficit at P1.56 trillion this year and gradually reduce it to P1.55 trillion, or 4.3% of GDP, by 2028.<\/p>\n


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“`html By Katherine K. Chan THE Philippines\u2019 budget shortfall declined in September, the Bureau of the Treasury (BTr) announced on Thursday, as investigations into flood control schemes restrained government expenditures. The financial gap decreased by 9.22% year on year to P248.1 billion, while month on month, it almost tripled from August\u2019s P84.8-billion deficit. 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Chan THE Philippines\u2019 budget shortfall declined in September, the Bureau of the Treasury (BTr) announced on Thursday, as investigations into flood control schemes restrained government expenditures. The financial gap decreased by 9.22% year on year to P248.1 billion, while month on month, it almost tripled from August\u2019s P84.8-billion deficit. 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