NG budget deficit balloons to P171.4 billion in February

By Aubrey Rose A. Inosante, Reporter

THE NATIONAL GOVERNMENT’S (NG) budget deficit ballooned to P171.4 billion in February despite double-digit revenue growth, the Bureau of the Treasury (BTr) reported on Wednesday.

Data from the BTr showed the budget deficit widened by 4.11% to P171.4 billion in February from the P164.7-billion gap in the same month last year.

Month on month, this was a reversal of the P68.4-billion surplus in January.

In February, revenues jumped by 12.39% to P251.8 billion from P224 billion a year earlier, as tax revenues increased by 10.9% to P234.3 billion.

Collections by the Bureau of Internal Revenue (BIR) jumped by an annual 15.7% to P159.7 billion in February, while Bureau of Customs’ (BoC) revenues inched up by 1.71% to P71.8 billion.

“The growth in the BIR’s February collection was primarily due to higher collections from corporate income tax (CIT), personal income tax (PIT), excise tax on tobacco and alcohol products, value-added tax (VAT), and documentary stamp tax (DST),” the BTr said.

Nontax revenues rose by 37.11% year on year to P17.4 billion in February.

“The increase was partly attributed to the one-off remittance of the Department of Agrarian Reform’s share of penalties imposed on lending institutions for noncompliance with the mandatory Agri-Agra credit requirement under Republic Act 10000,” the BTr said.

During the month, Treasury income went up by 21.9% to P7.9 billion due to higher interest income from NG deposits, managed funds, and NG’s share of Philippine Amusement and Gaming Corp.’s (PAGCOR) profit.

Revenues from other offices — which consisted of other nontax revenue, privatization proceeds fees, charges and grants — also rose by 53.04% to P9.5 billion.

Meanwhile, NG expenditures went up by 8.88% to P423.2 billion in February from P388.7 billion a year ago.

This was mainly due to higher capital expenditures of the Department of Public Works and Highways, which were used for progress billings and payment of right-of-way acquisition for various infrastructure projects.

More disbursements were also made by the Department of Health and Department of Social Welfare and Development for their programs.

Primary spending — the total expenditures minus interest payments, went up by 9.95% to P374.8 billion in February.

Interest payments inched up by 1.29% to P48.4 billion in February amid higher coupon payments on domestic securities. However, it was offset by lower foreign payments.

TWO-MONTH DEFICIT
In the January-to-February period, the budget deficit swelled to P103.1 billion from P76.7 billion a year ago.

“The NG’s total revenue collections and expenditures maintained double-digit year-on-year (YoY) growth during the first two months of 2025, which puts it on track to hit fiscal targets for the year,” the BTr said.

Revenues went up by 11.32% to P718.9 billion in the two-month period, as tax collections rose by 12.64% to P671.9 billion.

BIR revenues jumped by 15.31% to P514.7 billion due to higher VAT collections, CIT, PIT, final withholding tax on government securities, and DST.

“The BIR’s continued progress in revenue performance is credited to its ongoing improvements in tax payment systems and collection efficiency,” the BTr said.

Collections by BoC went up by 4.91% to P151 billion, which mirrored the 4.93% increase in import goods in the January-to-February period.

“BoC’s continuous modernization, border protection, and capacity development efforts have enabled the bureau to maintain its positive performance in the first two months of the year,” the Treasury said.

On the other hand, nontax revenues slipped by 4.67% to P47 billion “partly due to lower receipts from Malampaya proceeds.”

Revenues from other offices declined by 10.48% to P23.4 billion while the Treasury income inched up by 1.86% to P23.7 billion due to the increased NG share in PAGCOR’s profits.

On the other hand, state spending grew by 13.76% to P822 billion in the January-February period from P722.5 billion a year ago.

Primary expenditures rose by 11.43% to P669.1 billion as of end-February.

Interest payments also increased by 25.26% to P152.9 billion.

“The growing deficit shows the faster growth of disbursements, especially for social and infrastructure programs, compared to the revenue generation capability of the government,” Oikonomia Advisory and Research, Inc. economist Reinielle Matt M. Erece told BusinessWorld in a Viber message.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the February budget deficit widened as expenditures increased by P34.5 billion despite the P27.8-billion increase in revenues.

Mr. Ricafort expects another budget surplus in April “due to the seasonal increase in yearly tax collection/filing in view of the April 15 deadline set by the BIR.”

“The recent tax reform measures in terms of the 12% VAT imposed on foreign digital services providers and the 1% withholding taxes on online sellers… would help increase the country’s recurring tax revenues, narrow the budget deficit, and improve the overall fiscal performance,” he said.

Meanwhile, Mr. Erece said the budget deficit may continue to widen this year.

“We expect the deficit to continue growing this year, both as a result of an election year, as well as reflective of higher debt servicing costs in response to the higher borrowings they have incurred and will incur this year. The growing deficit calls the need for better revenue generation, especially in tax collections, to slowly close the gap of the national budget,” he said.

For this year, the NG’s deficit ceiling is capped at P1.54 trillion or 5.3% of gross domestic product (GDP).