THE NATIONAL Government’s (NG) budget deficit ballooned to P241.6 billion in June as state spending outpaced revenue collections, the Bureau of the Treasury (BTr) said on Thursday.
Data from the Treasury showed the Philippines’ budget deficit widened by 15.56% to P241.6 billion in June from P209.1 billion in the same month a year ago.
Month on month, the budget deficit widened by 66.46% from P145.2 billion in May.
In June, state spending jumped by 8.49% to P548.5 billion from P505.6 billion in June 2024.
The BTr attributed the faster spending to higher National Tax Allotment shares of local government units, the annual block grant to the Bangsamoro Autonomous Region in Muslim Mindanao, personnel services, and interest payments.
Primary spending — which refers to total expenditures minus interest payments — grew by 9.14% to P491.1 billion in June from P450 billion a year earlier. This accounted for 89.53% of the total June disbursements.
Interest payments increased by 3.19% to P57.4 billion in June this year from P55.6 billion in the same month in 2024.
NG’s primary deficit stood at P184.2 billion in June, up by 20.04% from P153.4 billion in the same month last year.
Meanwhile, revenue collections went up by 3.5% to P306.9 billion in June from P296.5 billion in the same month last year.
“The sustained double-digit growth in tax collections offset the high base effect of the one-off remittances under nontax revenues last year,” the BTr said.
Tax revenues increased by 12.35% to P280.1 billion in June from P249.3 billion in the same month in 2024.
The bulk came from the Bureau of Internal Revenue (BIR), which collected P200.5 billion in June, up by 16.24% from P172.5 billion a year ago.
Collections by the Bureau of Customs (BoC) rose by 3.23% to P77 billion, while other offices’ revenues rose by 16.71% to P2.6 billion.
On the other hand, nontax revenue slumped 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 surged by 116.49% to P16.1 billion in June from P7.4 billion a year ago, thanks to the NG’s bigger share in profits of the Philippine Amusement and Gaming Corp. as well as dividend remittance from the Power Sector Assets and Liabilities Management Corp.
Income from other offices also dropped by 73.04% to P10.7 billion in June.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the budget deficit in June was the widest in three months since March.
“Budget deficits could increase the need for additional borrowings from a cash flow perspective,” he said.
FIRST-HALF GAP
In the first six months of the year, the NG budget deficit widened by 24.69% to P765.5 billion from the P613.9-billion gap last year.
The BTr said the budget deficit remained relatively within target as it was 0.63% above the programmed P760.7 billion for the first half.
Revenue collection in the first half increased by 5.15% to P2.26 trillion from P2.15 trillion in the same period in 2024. This was 0.89% lower than the programmed P2.28 trillion for the six-month period.
Tax revenues rose by 10.74% to P2.03 trillion as of end-June, 1.3% below the P2.06 trillion program.
BIR collections increased by 14.11% to P1.55 trillion as of end-June, driven mainly 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 higher revenue came from increased excise tax collections on tobacco, including electronic cigarettes, through the Bureau’s continued efforts to intensify the crackdown on the illicit tobacco trade and the strict implementation of the mandatory excise tax stamps on vapor products,” it said.
Higher percentage tax collections from banks and financial institutions also helped boost BIR revenues.
The BoC collection inched up by 0.71% to P458.8 billion as of end-June, but 0.58% below the P461.4-billion program.
Nontax revenues slumped by 27.53% to P227.7 billion in the January-to-June period. It exceeded the P221.4 billion program by 2.87% amid better-than-expected income of the BTr.
Treasury income slipped by 11.37% to P145.3 billion in the first half, while other offices’ income fell by 45.14% to P82.5 billion.
Meanwhile, state spending rose by 9.49% to P3.03 trillion as of end-June, from P2.76 trillion a year ago. It was just 0.51% below the P3.04-trillion disbursement program for the period.
Primary expenditures rose by 9.41% to P2.61 trillion as of end-June, while interest payments increased by 9.97% to P414.8 billion.
In the first half, the NG’s primary deficit widened by 48.16% to P350.7 billion. It exceeded the first-half program of P343.7 billion by 2.04%.
“Although interest payments grew, the bulk of the deficit growth can be attributed to higher expenses due to government projects and disbursement to local government units,” Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said.
“The budget deficit can still be managed as revenue collection is still strong and debt obligations are growing at a modest pace. As long as each expenditure results in better productivity then the deficit may still be manageable,” he said.
For this year, the NG’s deficit ceiling is capped at P1.56 trillion or 5.5% of gross domestic product. — Aubrey Rose A. Inosante
