Budget gap widens to P786.8 billion in H1

MANILA, Philippines —  The Philippines booked a wider budget deficit of P786.8 billion in the first half, but still below the programmed level as revenue collection growth outpaced state spending.Data from the Bureau of the Treasury (BTr) showed that the government’s budget shortfall from January to June was 2.8 percent higher than last year’s P765.5 billion.

A budget deficit means that the government is spending beyond what it earned from revenue collections and at a slightly faster pace this time around.

“The Department of Finance is confident about the abilities of our revenue-generating agencies to be able to meet their targets for the second half of the year,” Finance Secretary Frederick Go told reporters.

Despite this, the government said the national government’s “fiscal performance remained on track” in the first half, as the six-month deficit is 0.2 percent, or P1.4 billion below the P788.2-billion midyear program set by the Development Budget Coordination Committee.

Revenue collection during the six-month period improved by 5.7 percent to P2.3883 trillion from P2.26 trillion in the same period last year, as tax and non-tax revenues both posted increases.

However, total collections undershot its P2.3885-trillion program for the period by only 0.1 percent.

The bulk or 89.7 percent, of revenues came from tax collections at P2.14 trillion, up by 5.4 percent from a year ago.

Non-tax collections also increased by 8.3 percent to P246.5 billion, supported by better-than-expected Treasury income performance.

Collections of the Bureau of Internal Revenue (BIR) rose by nearly five percent to P1.63 trillion but slightly missed the P1.65-trillion midyear program by 1.4 percent.

The BTr attributed the BIR collection growth to “higher collections from corporate income tax, personal income tax, value-added tax (VAT), other percentage taxes and miscellaneous taxes.”

The Bureau of Customs, on the other hand, logged a 7.2-percent increase to P491.9 billion revenue collection as of end-June, driven by the 10.3 percent rise in VAT collection, mainly as a result of higher oil prices.

“These gains effectively offset the 2.73-percent drop in excise collections, partly due to the decline in the volume of oil imports and the temporary suspension of excise tax on LPG and kerosene,” it said.

Customs surpassed its P484.8 billion target for the first semester by 1.5 percent despite an oil crisis.

Under non-tax revenues, income generated by the BTr soared by 25.8 percent to P182.7 billion as of the end-June period, exceeding its program by 11.5 percent.

Other offices, in contrast, posted a 22.6 percent decline to P63.8 billion.

Meanwhile, public spending in the first semester rose by nearly five percent to P3.18 trillion from P3.03 trillion in the same period last year, undershooting the programmed expenditures by 0.05 percent.

Primary expenditures at P2.69 trillion accounted for 86 percent of the total spending, up by 3.1 percent. Interest payments went up by 16.6 percent to P483.7 billion in the first half from P414.8 billion a year ago.

In June alone, the budget shortfall widened by 9.4 percent to P264.3 billion from P241.6 billion as the pace of expenditure growth took over revenues.

In 2026, the government recently revised its budget deficit projection to P1.66 trillion.