Budget gap widens, but remains below program

MANILA, Philippines —  The country’s budget gap widened to P614 billion in the first semester but this was below the programmed level as revenue collections exceeded targets and state spending was on track during the review period.

Data from the Bureau of the Treasury showed that the government incurred a higher budget deficit of P613.9 billion from January to June, 11 percent higher than last year’s P551.7 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.

Nonetheless, the first half budget shortfall is seven percent below the P661.8-billion expectation set by the Cabinet-level Development Budget Coordination Committee for the period.

The below program deficit for the six-month period was attributed to the increase in revenue collections as well as the almost flat state spending.

Data showed that total revenue collection in the first half improved by 16 percent to P2.15 trillion from P1.86 trillion in the same period last year, as both tax and non-tax revenues increased.

It also surpassed by more than three percent the programmed revenue collection of P2.08 trillion for the six-month period.

The bulk or 85 percent of revenues came from tax collections at P1.84 trillion, up by 10 percent from a year ago. Non-tax collections, on the other hand, soared by 63 percent to P314.2 billion.

The Bureau of Internal Revenue’s haul increased by 11.7 percent to P1.36 trillion but it missed the P1.4-trillion mid-year program by three percent.

The Bureau of Customs managed to post a five-percent growth in collection to P455.5 billion, surpassing the six-month target of P442.6 billion.

Income generated by the Treasury rose by 76 percent to P164 billion during the first half due to higher dividend remittance, interest on advances from state-owned corporations and the government share from the income of the Philippine Amusement and Gaming Corp.

It also exceeded the program by almost 30 percent and was just P23.1 billion short of the P187 full year target.

Collection from other offices including privatization proceeds and fees and charges for the six-month period also surged by 51 percent to P150.3 billion

On the other hand, government spending in the first semester rose by nearly 15 percent to P2.76 trillion from P2.41 trillion in the same period last year.

The figure was just one percent above the P2.74 trillion programmed spending set by the economic team for the first half.

In the same period last year, the government dealt with the problem of underspending that impacted economic growth in the second quarter of 2023.

Since then, the economic team ordered the creation of catch up spending plans and address bottlenecks in their utilization.

Because of the record P5.768-trillion allocation for this year, agencies are expected to execute their programs as authorized in the annual budget and deliver planned results in a timely manner to help economic growth.

The Treasury attributed the higher spending to the implementation of capital outlay projects of the Department of Public Works and Highways and the Department of National Defense.

The preparatory activities of the Commission on Elections for the 2025 midterm polls and the higher national tax allotment shares of local governments likewise boosted spending.

Primary expenditures at P2.39 trillion accounted for 86 percent of the total spending, up by 12 percent.

Apart from primary expenditures, the government increased its interest payments by 34 percent to P377.2 billion in the first half from P282.5 billion a year ago.

Both primary expenditures and interest payments were slightly above program for the first semester.