Philippine budget deficit widens slightly in September

The national government's (NG) budget deficit widened slightly in September despite double-digit revenue growth that outpaced the rise in government spending, the Bureau of the Treasury (BTr) said.

The fiscal gap inched up by 0.33% to PHP 248.9 billion in September from PHP 248.1 billion in the same month a year earlier, Treasury data released on Thursday showed.

“The deficit marginally increased as expenditure grew by PHP 37.3 billion year on year and tapered by a PHP 36.5-billion increase in total revenues,” the BTr said.

Month on month, the deficit ballooned by 54.35% from the PHP 161.3-billion shortfall recorded in August.

Total revenue collections jumped by 12.95% to PHP 318.2 billion in September from PHP 281.7 billion a year earlier, supported by double-digit growth in both tax and nontax revenues.

Tax revenues, which accounted for 93.68% of total collections, increased by 12.11% to PHP 298.1 billion in September from PHP 265.9 billion a year ago.

Collections by the Bureau of Internal Revenue (BIR) rose by 11.18% to PHP 203.4 billion in September from PHP 183 billion in the same month last year.

The Bureau of Customs’ collections went up by 14.76% to PHP 92.1 billion from PHP 80.3 billion a year earlier.

The Treasury attributed the sustained growth in Customs collections to the “peso depreciation and higher oil prices, as well as enforcement measures, improved valuation and assessment, and continued customs modernization.”

Nontax revenues surged by 27.22% to PHP 20.1 billion in September from PHP 15.8 billion a year earlier.

Broken down, BTr income increased by 5.74% to PHP 8.2 billion from PHP 7.8 billion a year ago, while nontax revenues from other offices surged by 47.94% to PHP 11.9 billion from PHP 8 billion.

Meanwhile, government expenditures increased by 7.04% to PHP 567.1 billion in September from PHP 529.8 billion a year earlier amid “continuing implementation of education, health, and social protection services, as well as an uptick in infrastructure expenditures.”

The Treasury also said local government units’ higher share of National Tax Allotments and the Annual Block Grant to the Bangsamoro Autonomous Region in Muslim Mindanao also contributed to the increase in spending.

Primary expenditures, which exclude interest payments, rose by 7.46% to PHP 481.5 billion in September from PHP 448.1 billion a year earlier. These accounted for 84.91% of total disbursements.

Interest payments increased by 4.74% to PHP 85.6 billion in September from PHP 81.7 billion in the same month last year.

Excluding interest payments, the government recorded a primary deficit of PHP 163.3 billion in September, narrowing by 1.84% from the PHP 166.4-billion shortfall a year earlier.

Nine-month gap

For the January-to-September period, the budget deficit widened by 16.64% to PHP 1.303 trillion from PHP 1.117 trillion in the same period last year, BTr data showed.

The nine-month shortfall exceeded the government’s PHP 1.206-trillion deficit program by 8.08% or PHP 97.4 billion.

This also represented 78.56% of the PHP 1.66-trillion full-year deficit ceiling approved by the Development Budget Coordination Committee in May.

Total revenue collections grew by 4.99% to PHP 3.535 trillion in the nine-month period from PHP 3.367 trillion a year earlier, but 0.95% below the PHP 3.569-trillion revenue target for the nine-month period. This accounted for 73.54% of the PHP 4.807-trillion full-year revenue program.

As of end-September, tax revenues rose by 5.64% to PHP 3.225 trillion, accounting for 91.23% of total collections.

BIR collections increased by 5.12% to PHP 2.442 trillion, although these remained 2.68% below the agency’s nine-month target.

Customs collections climbed by 7.77% to PHP 756.2 billion, exceeding its PHP 748.5-billion target by 1.03%.

Nontax revenues dipped by 1.32% to PHP 309.9 billion as of end-September from PHP 314.1 billion a year earlier, although these exceeded the nine-month program by 10.04%.

Meanwhile, nine-month government expenditures increased by 7.9% to PHP 4.838 trillion from PHP 4.484 trillion a year earlier.

This exceeded the PHP 4.775-trillion spending program for the first nine months by 1.33% and accounted for 74.82% of the revised PHP 6.466-trillion full-year disbursement target.

Primary expenditures rose by 6.49% to PHP 4.066 trillion as of end-September, while interest payments jumped by 15.95% to PHP 772.1 billion.

The nine-month primary deficit widened by 17.67% to PHP 531.2 billion from PHP 451.4 billion a year earlier.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the country’s fiscal challenges partly to sluggish economic growth following government underspending since late 2025.

In a Viber message, he said catch-up government spending, particularly on infrastructure, could help “pump-prime the economy back to the usual 5% levels,” improve tax collections, narrow the budget deficit, and reduce the debt-to-gross domestic product ratio.

Mr. Ricafort also called for stronger tax collection efforts and fiscal reforms, with new or higher taxes considered only a last resort.

“More disciplined NG spending also needed to narrow the budget deficit and curb the growth in outstanding debt in terms of anti-corruption measures,” he said.

The government set its fiscal deficit ceiling at PHP 1.659 trillion or -5.4% of GDP this year. —Justine Irish D. Tabile, Senior Reporter