Government budget reverts to deficit in February

MANILA, Philippines — The government reverted back to a budget deficit in February after a quick surplus at the start of 2025, but a narrower gap can still be expected as the tax season draws near.

Latest data from the Bureau of Treasury showed that the government swung back to a budget deficit of P171.4 billion in February from a brief surplus of P68 billion in January.

The February fiscal turnout also picked up by four percent from the P164.7 billion deficit in the same period last year.

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

For the two-month period, the budget deficit also rose by 34 percent to P103.1 billion from P76.7 billion as state spending outpaced the expansion of revenue collections.

For the next few months, however, the government is seen recording narrower budget deficits or even posting another surplus amid the tax collection season that will allow the administration to rake in higher revenues.

Data showed that total revenue collection in February grew by 12 percent to P251.8 billion as against the P224 billion in the same period last year, with both tax and non-tax revenues increasing.

The bulk or 93 percent of the revenues were from tax collections at P234.3 billion, up by 11 percent.

The Bureau of Internal Revenue (BIR)’s haul went up by 15.7 percent to P159.7 billion, primarily due to higher collections from various taxes such as corporate income, personal income, excise on tobacco and alcohol products, value-added tax and documentary stamp tax.

The Treasury said BIR’s continued progress in revenue performance is credited to its ongoing improvements in tax payment systems and collection efficiency.

The Bureau of Customs saw its collection barely move to P71.8 billion, but its continuous modernization, border protection and capacity development efforts are expected to further boost collection for the rest of the year.

Non-tax collections, on the other hand, surged by almost 40 percent to P17.4 billion in February, which was partly attributed to the one-off remittance of the Department of Agrarian Reform’s share of penalties imposed on lending institutions for non-compliance with the mandatory Agri-Agra Law.

Further, income generated by the Treasury improved by 22 percent to P7.9 billion due to higher interest income from government deposits and managed funds, as well as dividend remittances and share from the profit of the Philippine Amusement and Gaming Corp.

Collection from other offices including privatization proceeds and fees and charges for the month also surged by 53 percent to P9.5 billion.

For the two-month period, cumulative revenue collections picked up by 11 percent to reach P718.9 billion.

On the other hand, government spending in February rose by nearly nine percent  to P423.2 billion from P388.7 billion in the comparative period.

Primary expenditures at P374.8 billion accounted for 89 percent of the total spending, up by almost 10 percent.

The Treasury explained that spending for the month was driven by higher capital expenditures of the Department of Public Works and Highways, particularly from progress billings and payment of right-of-way acquisition for infrastructure projects.

Higher disbursements were also recorded in the Departments of Health and Social Welfare and Development for various programs on social protection.

Apart from primary expenditures, the government slightly increased its interest payments by one percent to P48.4 billion on higher coupon payments on domestic securities.

This was offset by lower foreign payments, reflecting the base effect of a timing adjustment in payments made in the same period last year.

As of end-February, total disbursements were also higher than revenues at 14 percent to P822 billion.