Deficit widens, gov’t to adjust targets

The fiscal gap of the Philippines widened last month (March) as spending growth outpaced revenue gains

Stronger cumulative collections, however, contributed to a slimmed deficit in the first quarter of the year.

In a statement on Thursday, the Bureau of the Treasury said the budget deficit in March rose 2% to P349.7 billion from a year earlier, driven by faster growth in government expenditures relative to revenues.

“This outturn reflects a higher year-on-year increase in expenditures of P32.6 billion, which outpaced the P25.8 billion rise in revenues,” the Treasury said.

Government revenues for the month increased 9.3% to P305.1 billion, supported by both tax and nontax sources, while expenditures climbed 5.2% to P654.8 billion.

Spending was lifted by higher transfers to local government units, including their share in national taxes and special allocations, as well as increased support to government-owned and -controlled corporations (GOCCs).

The government also released P20 billion to the Department of Energy for its emergency energy program to help shore up fuel supply amid external supply risks linked to the war in the Middle East.

Targets to be revised

The administration’s economic managers will adjust the Philippines’ economic targets due to inflationary and growth pressures stemming from the war in East Asia, Economy Secretary Arsenio M. Balisacan said.

Balisacan confirmed that the Development Budget Coordination Committee (DBCC) will have to recalibrate economic targets at its next meeting.

The secretary said the new targets will depend on the first quarter’s growth data.

Earlier, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona announced that the BSP raised its key policy rate by 25 basis points to 4.50%, ending its easing cycle.

Remolona said the economy would likely grow between 4.5% to 4.6% this year, slightly better than an earlier projection of 4.4%, but still below the government’s 5.0% to 6.0% target in 2026.