Budget shortfall widens to P106.3 billion

In July

MANILA, Philippines — The government’s budget deficit widened by more than five-fold to P106.3 billion in July as the government spent more than it earned, according to the Bureau of the Treasury (BTr).

Latest data from the BTr showed the budget shortfall widened by 461.7 percent to P106.3 billion in July from P18.9 billion in the same month in 2025.

A budget deficit means the government spent beyond what it earned from revenue collections.

In July, the government ramped up disbursements to support key government programs and projects, which inflated state expenditures by 19.8 percent to P588.6 billion from P491.2 billion.

The BTr said the increase was largely driven by social assistance programs under the Unified Package for Livelihood, Industry, Food and Transport framework to cushion the impact of the Middle East conflict.

It was also supported by capital outlay projects under the Department of National Defense’s Revised Armed Forces of the Philippines’ Modernization Program and direct payments by development partners for foreign-assisted rail projects of the Department of Transportation.

Primary expenditures of P451.4 billion accounted for 76.7 percent of the total spending, which went up by 17.3 percent from the recorded P385 billion in the previous year.

Interest payments went up by 29.1 percent to P137.2 billion in July due to “coupon servicing on additional domestic debt securities and Global bonds, as well as the impact of FX fluctuations on foreign-currency payments.”

On the other hand, revenue collections posted a modest 2.1-percent growth to P482.3 billion in July, tempered by the contraction in the non-tax revenue segment.

Tax revenues increased by seven percent to P452.7 billion, with both the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) posting growth in collections.

Collections by the BIR rose by 6.9 percent year-on-year to P358.4 billion in July from P335.3 billion a year ago, while that of the BOC grew by 7.5 percent to P91.6 billion over the same period.

On the other hand, non-tax uptake dropped by 39.9 percent to P29.6 billion due to base effects, which weighed down revenue growth.

The BTr said this is mainly due to the timing of BSP dividend remittance reflected under BTr income. The central bank remitted P59 billion in February 2026 and P3.4 billion in July this year, compared with P18.9 billion in the same month last year.

The July figures brought the seven-month deficit to P893.1 billion, 13.9 percent higher than the P784.4-billion budget gap last year.

Government expenditures posted a seven-percent increase to P3.76 trillion in the January to July period from P3.52 trillion a year ago.

Total revenue collection went up by 5.1 percent to P2.87 trillion during the January-to-July period, with tax revenues rising by 5.7 percent to P2.59 trillion.

Of the amount, BIR collections during the period stood at P1.99 trillion, up by 5.3 percent, due to improved performance, supported by better taxpayer services.

Collections from the BOC reached P583.4 billion, up by 7.3 percent, from a year ago, driven by the significant uptick in duties and value added tax collection from imports primarily due to the stronger US dollar and higher crude oil prices.

The fiscal deficit is expected to narrow to P1.66 trillion this year or a 5.45 percent deficit-to-gross domestic product ratio, from P1.58 trillion or 5.6 percent deficit to GDP ratio in 2025.