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The national government’s (NG) fiscal position swung to a surplus in April as an uptick in tax revenues offset the decline in state spending, the Bureau of the Treasury (BTr) said on Tuesday.

Data from the Treasury posted a PHP 67.3-billion surplus in April, a turnaround from the PHP 375.73-billion deficit in March.

The surplus was also 57.51% higher than the PHP 42.7-billion surplus seen in April 2024.

This was the first budget surplus since the PHP 68.36-billion surplus in January.

Revenue collections slid by 2.82% to PHP 522.1 billion in April from PHP 537.2 billion in the same month last year, “due solely to the timing of nontax collections.”

Nontax revenues plunged by 68.08% to PHP 24.1 billion in April from PHP 75.4 billion in the same month in 2024.

“This is because most government-owned and -controlled corporations (GOCCs) have yet to remit dividends, unlike the same period last year,” it said.

BTr revenues dropped by 77.42% to PHP 14.5 billion in April, while other offices saw a 15.64% decline to PHP 9.6 billion.

The Department of Finance last week reported that state-run firms remitted PHP 76 billion worth of dividends to the Treasury as of May.

On the other hand, tax revenues jumped by 7.84% to PHP 498 billion in April from PHP 461.8 billion in the same month in 2024.

The bulk of tax revenues came from the Bureau of Internal Revenue (BIR), whose collections rose by 11.1% to PHP 420.5 billion in April from PHP 378.5 billion a year ago.

“This strong performance was driven by higher collections from corporate income tax (CIT), value-added tax (VAT), and personal income tax (PIT),” BTr said, noting the annual tax filing deadline was April 15.

Improvements in personal income tax and VAT collections were attributed to BIR’s efforts to simplify tax filing through digital services, it added.

“The increase in VAT collections was also supported by the Bureau’s crackdown on the use of fake receipts and its continued campaign against illicit trade,” the BTr said.

The Bureau of Customs saw revenues fall by 7.48% to PHP 74.7 billion in April from PHP 80.7 billion a year ago.

“This is partly due to the fewer working days for the month and the impact of lower import volumes amidst global trade challenges,” the Treasury said.

In April, US President Donald J. Trump announced a baseline 10% tariff on all its trading partners, as well as higher reciprocal tariffs on some countries, including the Philippines. The reciprocal tariffs have been paused until July.

Meanwhile, government expenditure fell by 8.03% to PHP 454.8 billion in April from PHP 494.5 billion in the same month last year.

The BTr attributed the drop in state spending to lower interest payments, and subsidies to government corporations, particularly the National Irrigation Administration.

“The timing of transfer of the capitalization requirement of the Coconut Farmers and Industry Trust Fund also weighed down on the growth of April spending. In the previous year, the transfer was taken up in April while this year’s capitalization requirement was released in March,” it said.

Primary spending — which refers to total expenditures minus interest payments — slipped by 4.37% to PHP 408.3 billion in April from PHP 427 billion a year earlier.

Interest payments fell by 31.19% to PHP 46.4 billion in April this year from PHP 67.5 billion in the same month in 2024.

The annual decline in interest payments was attributed to the shift in the timing of payments of both domestic securities and external loans related to Lenten and Eid’l-Fitr holidays.

“Fundamentally, budget surpluses are expected during the month of April in a given year during the tax collection/filing month on a yearly basis. The budget surplus could reduce the need for additional borrowings/debt by the NG,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc. said the drop in spending may have been due to the election ban on some public spending which started in late March and ran until election day.

“However, this surplus may not last long as faster government spending is expected this year to support the economy,” he said.

4-month gap

At the same time, the NG’s fiscal deficit widened to PHP 411.5 billion in the January-to-April period, 78.98% bigger than the PHP 229.9-billion gap a year ago, as the pace of expenditures outpaced revenues.

The BTr said the deficit ballooned due to the “faster expansion in public spending to fuel economic activity and support priority programs of the Marcos Jr. administration.”

State spending went up by 13.57% to PHP 1.93 trillion in the first four months from PHP 1.7 trillion in the same period last year.

Primary spending increased by 14.16% to PHP 1.64 trillion, while interest payments rose by 10.35% to PHP 287.4 billion.

On the other hand, revenues inched up by 3.35% to PHP 1.52 trillion in the January-to-April period from PHP 1.47 trillion a year ago.

Taxes, which account for 94.03% of the total revenues, increased by 11.49% to PHP 1.43 trillion.

BIR revenues rose by 14.5% to PHP 1.11 trillion in the first four months, due to the intensified campaign against fake receipts, illicit trade, digitalized tax filing and higher excise tax collections.

Customs collections inched up by 2.16% to PHP 306.1 billion as of end-April.

Meanwhile, nontax revenues slumped by 51.94% to PHP 90.7 billion in the January-to-April period from PHP 188.8 billion a year earlier. 

The NG’s deficit ceiling for 2025 is capped at PHP 1.54 trillion or 5.3% of gross domestic product. — Aubrey Rose A. Inosante

The Asian Development Bank (ADB) on Tuesday said it is set to approve this year a new USD  400-million loan for the Philippines, which would fund efforts to boost the country’s marine ecosystem and “blue economy.”

“Today, I am pleased to share that a USD  400-million loan for the Philippines is set for approval this year, to strengthen marine ecosystems and support the blue economy under its National Adaptation Plan,” ADB President Masato Kanda said during the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) Summit in Kuala Lumpur.

Mr. Kanda was referring to the loan for the Marine Ecosystems for Blue Economy Development Program (Subprogram 1). The program falls under the National Adaptation Plan, which aims to reduce the country’s vulnerability to climate change impacts by boosting adaptive capacity, fostering resilience, and integrating adaptation into relevant policies and programs.

According to the ADB’s website, this project aims to establish an integrated and inclusive management of coastal and marine ecosystems, improved plastic and solid waste circularity.

The “blue economy” refers to the responsible use of ocean resources to foster economic growth, improve livelihoods, and ensure the long-term sustainability of marine ecosystems.

Valued at PHP 943.05 billion in 2023, the blue economy covers fisheries, manufacturing of ocean-based products, tourism, shipping, and offshore energy.

Meanwhile, Mindanao Development Authority Chairman Leo Tereso A. Magno said the multilateral lender has committed to extending assistance to projects in Mindanao.

“They gave an amount during the meeting earlier and they committed for some funds, additional funds for our country, to develop Mindanao and Palawan,” he told reporters in Kuala Lumpur.

Separately, the ADB also expects to approve a USD 62.7-million loan for the first phase of the Mindanao Irrigation Development Project in 2026.

It aims to improve irrigation planning and promote climate-resilient farming systems to boost agricultural productivity in Mindanao.

Another related initiative scheduled for approval next year is the USD  61-million Promoting Sustainability and Productivity for Enterprise Resilience and Upscaling in the Philippines (ProSPER) Project.

ProSPER supports agricultural diversification and food value chain development in Mindanao by “promoting private investments in agro-industry, improving agricultural logistics and services, and enhancing product quality and competitiveness.”

‘Dynamic growth hub’

Meanwhile, Mr. Kanda said the ADB supports BIMP-EAGA’s Vision 2035, which positions the region as a “dynamic growth hub.”

“We stand at a crucial juncture and must navigate a great deal of uncertainty. The region must face the impacts of trade and geopolitical tensions, rapid technological shifts, and threats to food and energy security,” he said.

To unlock the region’s potential, Mr. Kanda said there is a need to tackle vulnerabilities in the food system.

“BIMP-EAGA is known as ASEAN’s (Association of Southeast Asian Nations) food basket, sustaining millions through agriculture, fisheries, and aquaculture. But climate change threatens food security and marine ecosystems. We must act to address this,” he said.

Mr. Kanda said the ADB is scaling up its investment in food security to USD 40 billion through 2030.

“In the Philippines, we have deployed USD 500 million for agricultural development through policy and regulatory reforms, enhanced public services and financial support, and protection of rural families,” he said.

To boost regional energy integration, Mr. Kanda said the ADB is also prepared to commit up to  USD  10 billion to advance the ASEAN Power Grid.

Mr. Kanda also sees opportunities in BIMP-EAGA’s expanded economic corridors and special economic zones.

The ADB chief said the bank is ready to double trade finance in the ASEAN to more than USD  2.5 billion annually by 2030. — A.R.A. Inosante

 

The PHP 8.7-billion rehabilitation of the Epifanio de los Santos Avenue (EDSA) is set to begin on June 13 and expected to be completed by 2027, the Department of Transportation (DoTr) said on Monday.

The DoTr outlined plans to address the traffic congestion that is expected to worsen once parts of Metro Manila’s busiest highway will be closed for rehabilitation work.

“We will rebuild EDSA. This project by the Department of Public Works and Highways (DPWH) will rehabilitate the full stretch of EDSA and make it a green and walkable highway. We need to change the entire concrete structure of EDSA,” Transportation Secretary Vivencio B. Dizon said at a media briefing on Monday.

The EDSA rebuild project, which will run for two years, will be the highway’s first major rehabilitation since 1980. Around 437,000 vehicles use EDSA every day.

Public Works Secretary Manuel M. Bonoan said the project aims to make Metro Manila’s longest and most congested highway a more pedestrian and commuter-friendly road.

Preparatory works will begin on the night of June 13, while construction will go full blast a week after, Mr. Bonoan said. This will include laying out the sections as the rehabilitation project is intended to be implemented lane by lane.

“The concept of the rebuild project, our deliverables are to rebuild and reconstruct the entire EDSA. We will change the pavement into a new one, in other words we will flip the entire EDSA and adapt the latest technologies on concrete mix,” Mr. Bonoan said.

“We will deploy several contractors simultaneously. Construction will proceed lane by lane.”

Overall, a total of 200 kilometers of lane covering both northbound and southbound of EDSA will be rehabilitated, Mr. Bonoan said, adding that the south portion will be done first, followed by the northbound section next year.

“I do not think we can finish the southbound portion this year because it is already the middle of the year. We will continue the implementation of southbound and northbound until next year, simultaneously,” Mr. Bonoan said.

Starting mid-June, the government will work on the excavation of the existing surface and installation of new concrete, prioritizing the sections of Pasay and Guadalupe.

Mr. Bonoan said the EDSA Bus Lane, which serves nearly 200,000 average daily passengers, will continue to operate during the rehabilitation period.

He said the government is prioritizing the south portion of EDSA due to the country’s anticipated hosting of the Association of Southeast Asian Nations (ASEAN) Summit in 2026 which is expected to be held in the south of Metro Manila.

“Our consideration for this scheme is the ASEAN meeting. We will have to avoid the construction in EDSA during that time,” Mr. Bonoan said.

Traffic management

DoTr’s Mr. Dizon said that San Miguel Corp. (SMC) had agreed to waive the toll fee for some segments of the Skyway Stage 3 during the EDSA rehabilitation period.

“We understand that this temporary arrangement might result in loss of income to SMC, the operator of Skyway. In response, the DoTr and Toll Regulatory Board are exploring options to grant SMC some reprieve, including possible extension of their concession agreement with the government,” he said.

BusinessWorld also sought comment from SMC but it has yet to respond as of the deadline.

“The free toll will begin once the full blast of construction starts, so maybe that is July or August,” Mr. Dizon said.

The DoTr and the Metropolitan Manila Development Authority (MMDA) have also developed their initial traffic mitigation plans which include the deployment of 100 units of bus on EDSA Busway; and more trains at Metro Rail Transit Line 3 (MRT-3).

MMDA Chairman Romando S. Artes said the odd-even scheme for private cars will also be strictly implemented along EDSA for a 24-hour period except on Sundays.

Under this scheme, private cars with plates ending in odd digits will be barred from using EDSA during Mondays, Wednesdays, and Fridays, while vehicles with plate numbers ending in even numbers cannot use EDSA on Tuesdays, Thursdays, and Saturdays.

“With this scheme, we expect a 40% reduction of vehicles in EDSA. The existing coding schemes will continue to be in place for roads outside EDSA,” Mr. Artes said.

Electric vehicles, and hybrid cars are exempted from the number coding scheme, under the Electric Vehicle Industry Development Act (EVIDA) in the Philippines.

Transportation Network Vehicle Service (TNVS) like Grab and inDrive are also exempted from the odd-even scheme on EDSA.

Further, trucks and provincial buses will also be prohibited from using EDSA during 5 a.m. to 10 p.m. starting June 13.

Economic impact

A 2018 Japan International Cooperation Agency (JICA) study had estimated the economic cost of traffic congestion in Metro Manila stood at around PHP 3.5 billion a day.

“EDSA rehabilitation should have been done years ago. It would create temporary pains. I was part of the JICA study (in 2018), and the economic loss is now already bigger than that. It can go down, after the completion of EDSA rehabilitation,” Rene S. Santiago, former president of the Transportation Science Society of the Philippines, said in a Viber message to BusinessWorld.

Manila was the 14^th most traffic congested city in the world, with an average travel time of 32 minutes for an average 10-kilometer distance, according to the latest edition of the TomTom Traffic Index.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said that the closure of parts of EDSA would likely worsen traffic and affect consumer activity.

“The expected traffic disruptions caused by construction, coupled with the odd-even scheme, are likely to discourage individuals from visiting shopping malls, restaurants, and entertainment venues along EDSA. People may prefer to visit establishments outside of congested areas or accessible via alternate routes,” he said in a Viber message.

However, Mr. Rivera said that once the project is completed, it can deliver long-term benefits including improved traffic flow and reduced travel time.

“This will increase productivity and lower vehicle operating costs and fuel consumption. It will also help better road safety and commuter experience; higher business confidence and increased property values along EDSA,” he said.

Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said that the EDSA rehabilitation can have a significant impact on both traffic patterns and economic activities, especially for businesses reliant on foot traffic.

Mr. Arce said this may boost online shopping as consumers prioritize convenience.

“Some businesses may adapt by emphasizing delivery services or offering online shopping options. However, those unable to pivot effectively may suffer more severely,” he said.

Shopping malls and entertainment venues could face lower revenues, Mr. Arce said, noting that these businesses rely on impulse visits and foot traffic.

“Overall, while the rebuild project is necessary for long-term improvements, its short-term disruptions will likely affect consumer habits and business revenues unless proactive steps are taken to manage and mitigate the impacts,” he said. – Ashley Erika O. Jose, Reporter

Monetary policy may not be enough to cushion the economy from the potential impact of trade shocks, the Bangko Sentral ng Pilipinas (BSP) said.

“Today, unprecedented policy shocks are fueling a befuddling kind of uncertainty. Monetary policy alone cannot fully shield the economy from the repercussions of these shocks,” BSP Deputy Governor Zeno Ronald R. Abenoja said at a forum hosted by the Philippine Institute for Development Studies (PIDS) and central bank on Monday.

“Broader, coordinated strategies would indeed help.”

Quoting BSP Governor Eli M. Remolona, Jr., Mr. Abenoja said that trade shocks are “more damaging” than supply shocks.

“Unlike your usual supply shocks, which tend to be transitory, trade shocks have deeper, more persistent effects,” he said.

Last month, US President Donald J. Trump slapped reciprocal tariffs on nearly all its trading partners. However, he suspended the implementation of the higher tariffs until July but kept the baseline 10% tariff.

“In particular, trade shocks affect the capital stock of developing economies. Left unchecked, they can slow growth trajectories and erode decades of hard-won progress,” Mr. Abenoja said.

Mr. Remolona earlier said that central banks have been concerned about the global trade uncertainties, prompting the need to update models and frameworks to better account for these risks.

However, Mr. Abenoja said the Philippines is “well-positioned to manage inflation.”

Headline inflation slowed to an over five-year low to 1.4% in April, bringing the four-month average to 2%.

“This gives us extra degrees of freedom to ease monetary policy which in turn can support growth,” he added.

Mr. Remolona has signaled the possibility of two more rate cuts this year, in “baby steps” or increments of 25 basis points (25 bps).

Last month, the Monetary Board lowered benchmark interest rates by 25 bps to bring the policy rate to 5.5%.

The central bank has so far slashed borrowing costs by a total of 100 bps since it began its easing cycle in August last year.

“The BSP stands ready to do what is necessary to keep inflation steady and maintain the country’s macroeconomic stability,” Mr. Abenoja added.

Industrial policy

Meanwhile, PIDS Emeritus Research Fellow and former Trade Undersecretary Rafaelita M. Aldaba said the government must continue to pursue more structural reforms to benefit from the trade diversion arising from these tariff policies.

“A lot of countries are also strategizing, and hence it’s really important for the Philippines to quickly move swiftly towards the implementation of our strategies. We don’t want to be a passive beneficiary,” she said.

“What we want is for the Philippines to be a strategic player in this global economy,” she added.

Ms. Aldaba said the country is well positioned to take advantage of manufacturing and production relocation.

“These are opportunities, like I said, for relocation production from China and the ASEAN-5 countries can absorb these diverted investments,” she said.

For example, the Philippines and Malaysia are well-positioned to absorb the manufacturing of electronic products.

“Philippines also, we can be a location for light electric devices, appliances, footwear, garments, accessories, and toys,” she said.

Ms. Aldaba said there is a need to continue enhancing industrial policy.

“Our recommendation is, perhaps, to build on the new industrial policy that was started from 2012 onwards. We hope that we’ll be able to integrate this industrial policy with our trade policy.”

“There are two measures that I would like to highlight. One is on industrial policy, and the other is in terms of protecting our exports and improving our industries,” she added.

Ms. Aldaba said it will be vital for the country to be able to “move up the global value chain from final assembly to more high-value stages.”

There is also a need to diversify production and trade partners, she added.

“And in terms of the rules of our trade compliance, this is also very important. Of course, rescaling, upskilling the workforce to make more complex, more advanced production would also be a vital part of the middle elements for us to promote our industries.”

“Two very important elements of our strategy would be the industrial upgrading part and trade defense and monitoring mechanisms,” she added. — Luisa Maria Jacinta C. Jocson

The Bangko Sentral ng Pililipinas (BSP) said it is looking at shifting to a point target for inflation, from the current 2-4% target band, its top official said.

“We’re seriously thinking of just having a point, a target level,” BSP Governor Eli M. Remolona, Jr. told reporters in a press chat on Friday.

“A single number, yes. In the US, it’s just 2%. In many other central banks, it’s just one number,” he added.

In December, the Development Budget Coordination Committee, in consultation with the BSP, set the inflation target at 2-4% from this year until 2028.

A medium-term inflation target helps “strengthen the forward-looking approach to monetary policy formulation with the view of helping anchor inflation expectations to the target,” the central bank earlier said.

Mr. Remolona said the inflation target they are eyeing may be a bit lower than the 3% midpoint of its current target band.

“Maybe 2% is good enough. We don’t know yet. We’re crunching the numbers,” he added.

The target also cannot be too low, Mr. Remolona said, as this has implications on economic output.

“The reason it’s not zero is because in a growing economy, you have to allow relative prices to change. And when you allow relative prices to change, they tend to be sticky downwards.”

“Allowing them to change means some inflation. It constrains the economy if you have too low a target,” he added.

In the past, the central bank had relied on operating targets under a framework for monetary aggregates in its policy decisions, according to a study by the International Monetary Fund (IMF).

The BSP adopted a modified targeting approach in 1995 after inflation spiked to double-digit levels amid a rice supply shortage. This approach focused more on price stability rather than monetary aggregate ceilings.

In 2002, the central bank formally shifted to inflation targeting.

From 2012 to 2014, the target range for inflation was 4% ± 1.0 percentage point. In 2015, the BSP’s inflation target was set at 3% ± 1.0 percentage point and this was applied up until 2022, though the central began using the alternative 2-4% band around this time.

The BSP is currently working with the IMF on studying the shift to a point target for inflation.

“There won’t be an update soon. It was something we asked the IMF to look at. They won’t be able to give us something very soon, they take their time. But I’m comfortable with our band between 2% and 4%.”

The central bank could transition to the point target a year from now at the latest, he added.

RRR cuts

Meanwhile, the BSP chief said reserve requirement ratio (RRR) cuts are unlikely for the rest of the year.

“Maybe (RRR cuts) for next year. Because we’re trying to make the yield curve more reliable, which means managing liquidity in the system better than we have and that the reserve requirement is a factor in that,” Mr. Remolona said.

“So far, we’ve been trying to manage liquidity by issuing our own BSP bills. We’ve been issuing large amounts of BSP bills in an effort to absorb the liquidity in the system.”

As of March, the RRR of universal and commercial banks and nonbank financial institutions with quasi-banking functions was reduced by 200 basis points (bps) to 5% from the current 7%.

The RRR for digital banks was also lowered by 150 bps to 2.5%, while the ratio for thrift lenders was cut by 100 bps to 0%.

Rural and cooperative banks’ RRR has been at zero since October, the last time the BSP cut reserve requirements.

“Reserve requirement (cuts) expand liquidity that’s in the system. So, we’re trying to manage that,” Mr. Remolona said.

“We might start issuing BSP bills. An alternative to that is selling the Treasury securities that we hold. That has the same effect on liquidity.”

Earlier data from the central bank showed that around 50% of its market operations are done through the BSP bills.

‘De-dollarization’

Meanwhile, Mr. Remolona said that veering away from the dollar as the world’s reserve currency would be a long and slow process.

This amid talks of “de-dollarization” or the shift away from the US dollar amid policy uncertainty from President Donald J. Trump’s administration.

“As you know, it’s been a safe-haven currency for a long time. Every time there’s some tension somewhere in the world, the dollar strengthens. Money moves into the dollar.”

“In theory, the safe-haven advantage of the dollar may be reduced over time. But it’s a slow process. It doesn’t happen right away,” he added.

The dollar index, which measures the greenback against a basket of currencies, hit a three-week trough, Reuters reported.

For the week, the dollar was down 1.9%, on track for its biggest weekly percentage decline since early April.

This after Mr. Trump unleashed his latest trade threats, recommending 50% tariffs on European Union imports from June 1 and considering a 25% tariff on any Apple iPhones made outside the US.

Mr. Remolona noted that the United Kingdom’s top invoicing currency used to be the US dollar and their trade was done through dollars as well.

“Then they had Brexit and their invoicing currency moved to the euro. So, this dominance of the dollar is not permanent. It can be eroded,” he said.

Mr. Remolona also noted the failure to produce an “international currency.”

“There was an effort to make international currency. That hasn’t worked out. So, it’s still not very liquid. Those talks come and go,” he said.

“Before the renminbi, it was the Japanese yen. Didn’t work out. I’m not sure there’s a different strategy. It’s still talk. It might be a long while.” – Luisa Maria Jacinta C. Jocson, Senior Reporter