Budget gap narrows in May 

The national government’s budget deficit narrowed in May as faster revenue collection offset a slowdown in spending due to the election ban, the Bureau of the Treasury (BTr) said.

Data from the Treasury showed the Philippines’ budget deficit shrank by 17.01% to PHP 145.2 billion in May from PHP 174.9 billion in the same month a year ago.

“This lower deficit was primarily driven by a robust 13.35% growth in revenue collections, alongside a moderation in expenditure growth to 3.81% during the national elections month,” the Treasury said.

The Commission on Elections’ 45-day ban on public works spending ended after the May 12 elections.

Month on month, the budget balance swung to a deficit from the PHP 67.3-billion surplus in April.

In May, revenue collections jumped by 13.35% to PHP 433.1 billion from PHP 382.1 billion a year earlier.

Tax revenues increased by 6.25% to PHP 322.9 billion in May from PHP 303.9 billion in the same month in 2024, as Customs collections declined.

The Bureau of Internal Revenue (BIR) collected PHP 242.7 billion in May, up 10.71% year on year.

“This increase was primarily driven by corporate income tax (CIT), followed by personal income tax (PIT), excise tax on tobacco products, taxes on government securities, and taxes on banks and financial institutions,” it said.

The intensified collection effort, ongoing digital transformation, and campaign to curb fake transactions and illicit tobacco trade also helped drive BIR collections.

However, the Bureau of Customs (BoC) saw collections fall by 6.94% to PHP 75.7 billion in May, reflecting the impact of Executive Order No. 62 which lowered tariffs on rice, electric vehicles, and other commodities.

Other collections surged by 34.7% to PHP 4.5 billion annually from PHP 3.4 billion.

Nontax revenues jumped by 40.93% to PHP 110.2 billion in May from PHP 78.2 billion in the same period last year.

Treasury income more than quadrupled to P83 billion in May from PHP 20.2 billion a year ago, mainly due to the higher dividend remittances from government-owned and -controlled corporations (GOCCs). Most GOCCs sent their dividend remittances in May this year.

Revenues from other offices — which consisted of other non-tax revenue, privatization proceeds fees, charges and grants — slid by 53.18% to PHP 27.2 billion.

Meanwhile, NG expenditure grew by 3.81% to PHP 578.2 billion in May from PHP 557 billion a year ago.

BTr attributed this increase to higher interest payments, National Tax Allotment releases to local government units and Annual Block Grant to the Bangsamoro Autonomous Region in Muslim Mindanao.

“The implementation of the 2^nd tranche of salary adjustments of qualified civilian government employees pursuant to Executive Order No. 642 also contributed to the growth of spending in May,” it added.

Primary spending — which refers to total expenditures minus interest payments — inched up by 2.5% to PHP 508.3 billion in May from PHp 495.9 billion a year earlier. This also accounted for 87.9% of total May disbursements, BTr said.

Interest payments increased by 14.5% to PHP 70 billion in May this year from PHP 61.1 billion in the same month in 2024, due to higher coupon payments for domestic and external debt.

NG’s primary deficit stood at PHP 75.2 billion, down 33.93% from P113.8 billion in the same month last year.

Five-month gap

In the January-to-May period, the NG budget deficit widened by 29.41% to PHP 523.9 billion from the PHP 404.8-billion gap last year, as the government accelerated spending on infrastructure and social programs.

“NG remains on track to meet its deficit target for the year through prudent fiscal management and efficient use of resources, in line with its Medium-Term Fiscal Program,” the BTr said

During the period, state spending rose by 9.71% to PHP 2.48 trillion from PHP 2.26 trillion a year ago.

Primary expenditures rose by 9.48% to PHP 2.12 trillion as of end-May while interest payments increased by 11.14% to PHP 357.4 billion.

Total revenue collection during the five-month period increased by 5.41% to PHP 1.95 trillion from PHP 1.85 trillion in the same period in 2024.

Tax revenues jumped by 10.49% to PHP 1.75 trillion, “highlighting the sustained strength of the government’s revenue-generating efforts.”

BIR collection rose by 13.8% to PHP 1.35 trillion as of end-May, while Customs collection was up by 0.22% to PHP 381.7 billion.

Meanwhile, non-tax revenues slumped by 24.75% to PHP 200.9 billion in the January-to-May period, “due to several one-off remittances last year.”

Treasury income slipped by 17.44% to PHP 129.2 billion due to the impact of the high base effect last year, which included the one-off gain from the Casecnan Hydroelectric Power Plant privatization proceeds.

Revenues from other offices also slid by 35.1% to PHP 71.7 billion as of end-May.

During the period, the NG’s primary deficit doubled to PHP 166.5 billion, “reflecting the government’s sustained investments in critical programs to support economic growth.”

“The widened budget deficit reflects sustained spending pressures amid slower revenue growth. While the narrower May deficit is a positive sign, it is inadequate to offset the cumulative shortfall from earlier months,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies said. “This underscores the need for improved revenue collection, better tax administration, and more targeted spending.”

For this year, the NG’s deficit ceiling is capped at PHP 1.54 trillion or 5.3% of gross domestic product. — Aubrey Rose A. Inosante, Reporter