Philippine budget deficit edges up as September spending outpaces revenue growth

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Philippine budget deficit September

Highlights

Philippine government revenues rose 12.95% year on year to P318.2 billion in September, led by 12.11% growth in tax collections and 27.22% surge in nontax receipts.
Government expenditures increased 7.04% to P567.1 billion, driven by higher allocations for education, health, social programs, infrastructure, and transfers to local government units.
September's primary deficit narrowed to P163.3 billion from P166.4 billion, even as the overall fiscal deficit rose marginally due to expenditure growth outpacing revenue gains.

September fiscal performance and revenue trends

As reported by BusinessWorld Online, Treasury data released on Thursday showed total revenues rose 12.95% year on year to P318.2 billion in September from P281.7 billion, supported by double-digit gains in both tax and nontax collections.

The Bureau of the Treasury said the deficit increased marginally because expenditure grew by P37.3 billion from a year earlier, slightly above the P36.5-billion increase in total revenues. Tax revenues, which made up 93.68% of total collections, climbed 12.11% to P298.1 billion from P265.9 billion.

Collections from the Bureau of Internal Revenue increased 11.18% to P203.4 billion from P183 billion, while the Bureau of Customs posted a 14.76% rise to P92.1 billion from P80.3 billion. The Treasury attributed continued Customs growth to peso depreciation, higher oil prices, enforcement measures, improved valuation and assessment, and ongoing customs modernization.

Nontax revenues surged 27.22% to P20.1 billion from P15.8 billion a year earlier.

Spending drivers and deficit implications

Government expenditures increased 7.04% to P567.1 billion in September from P529.8 billion a year earlier, reflecting continued implementation of education, health and social protection programs, as well as higher infrastructure spending.

The Treasury also said the increase in disbursements was supported by local government units' bigger share of National Tax Allotments and the Annual Block Grant to the Bangsamoro Autonomous Region in Muslim Mindanao. Primary expenditures, which exclude interest payments, rose 7.46% to P481.5 billion from P448.1 billion and accounted for 84.91% of total disbursements.

Interest payments went up 4.74% to P85.6 billion from P81.7 billion. Excluding interest payments, the government recorded a primary deficit of P163.3 billion in September, narrower than the P166.4-billion shortfall in the same month last year.

In our earlier article, we examined the Philippines’ planned sovereign bond reforms—including a new pricing convention for peso-denominated government bonds and a push for inclusion in a major emerging-market bond index—aimed at improving liquidity and widening the investor base. We noted that cheaper borrowing and stronger inflows still hinge on global rates and fiscal credibility, and that the real economic payoff depends on how any fiscal space is used for productive spending such as infrastructure, education, and health while broader capital-market and governance constraints are addressed.

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