Budget deficit narrows in March

The National Government’s budget deficit narrowed in March as revenue collections rose by 11%. — Photo by Edd Gumban, The Philippine Star

By Luisa Maria Jacinta C. Jocson, Reporter

THE National Government’s (NG) budget gap narrowed in March amid a dip in tax collection and muted spending, the Bureau of the Treasury (BTr) reported on Wednesday.

Data from the BTr showed the Philippines’ budget deficit shrank by 6.82% to P195.9 billion in March from P210.3 billion in the same month a year ago.

Month on month, the fiscal gap widened from the P164.7-billion deficit in February.

“The NG’s budget deficit for March narrowed on the back of 11.32% year-over-year revenue growth vis-à-vis a 3.18% increase in government spending,” the BTr said in a press release.

In March, revenue collections rose by 11.32% to P287.9 billion from P258.7 billion last year.

Tax revenues dipped by 0.23% year on year to P223.9 billion amid a decline in collections by the Bureau of Customs.

Customs revenues slumped by an annual 6.78% to P74.9 billion in March, which the BTr attributed to fewer working days. The Holy Week break fell in the last week of March.

On the other hand, the Bureau of Internal Revenue (BIR) collected P145.3 billion in March, up 3.11% from P141 billion a year ago. Revenue from other offices jumped by 17.82% to P3.6 billion.

Nontax revenues climbed by an annual 86.94% to P64.1 billion in March, as Treasury revenues more than tripled to P49.1 billion.

“The significant increase for the month was primarily driven by higher dividend remittances, interest on advances from government-owned and -controlled corporations (GOCCs), specifically from the National Irrigation Administration and NG share from Philippine Amusement and Gaming Corp. income,” the BTr said.

Other offices saw a 22.71% decline in nontax revenues to P15 billion, “due to last year’s one-off return of P5.7 billion in unutilized unconditional cash transfer program (UCT) funds, as well as lower Malampaya proceeds for the period,” the BTr said.

Meanwhile, expenditures stood at P483.8 billion in March, up by 3.18% from P468.9 billion a year ago.

“While higher disbursements were recorded in departments/agencies, the growth of spending in March was weighed down by the lower subsidies to government corporations and transfers to local government units (LGUs), in particular the special shares of LGUs in the proceeds of national taxes,” the BTr said.

“The transfer of the P15-billion Coco Levy Funds to the Coconut Farmers and Industry Trust Fund for this year is still expected this April; whereas last year’s release was made in March,” it added.

Primary spending — which refers to total expenditures minus interest payments — inched up by 1.2% to P412.9 billion in March.

Interest payments rose by 16.5% to P70.9 billion, mainly attributed to “coupon payments for domestic securities and the downward adjustments to last year’s interest payments due to premia on re-issued bonds.”

Security Bank Corp. Chief Economist Robert Dan J. Roces said that the narrower fiscal deficit in March indicates a “positive development in fiscal management.”

“This reduction could be attributed to a variety of factors, such as increased government revenues from higher tax collections and improved economic activity, and/or decreased government spending,” he said in a Viber message.

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said that the growth in revenues “bodes well” for the government’s fiscal consolidation plan.

“If revenue intake continues its uptick this year because of better economic performance, then it would not be a surprise that the fiscal consolidation plan is on track for this year,” he said in a Viber message.


Meanwhile, the fiscal gap widened by 0.65% to P272.6 billion in the first quarter from P270.9 billion in the same period a year ago.

Data from the BTr showed revenues rose by 14.05% to P933.7 billion in the January-to-March period from P818.7 billion a year ago.

Tax revenues stood at P820.3 billion in the three-month period, higher by 12.83% from P727.1 billion.

BIR revenues climbed by 17.15% to P591.8 billion while Customs collections edged higher by 2.35% to P218.9 billion.

Nontax revenues jumped by 23.78% year on year to P113.4 billion, as BTr revenues surged by 85.26% to P72.3 billion. Revenue from other offices fell by 21.83% to P41.1 billion.

Meanwhile, government spending picked up by 10.72% to P1.206 trillion in the first three months from P1.09 trillion in the same period in 2023.

In the first quarter, primary spending rose by 6.94% to P1.013 trillion while interest payments jumped by 35.93% to P193 billion.

“The slight widening of the deficit in the first quarter by 0.65% to P272.6 billion from P270.9 billion indicates that while there has been a month of fiscal tightening, the overall quarter still saw a marginal increase in the deficit,” Mr. Roces said.

He also noted that the slightly wider deficit in the first quarter does not mean the country’s fiscal consolidation is off track.

“Fiscal consolidation is a gradual process, and the government’s ability to manage expenditures and boost revenues in the coming quarters will be crucial to staying aligned with the consolidation goals,” he added.

This year, the government has set a budget deficit ceiling of P1.48 trillion or equivalent to 5.6% of gross domestic product (GDP). It is aiming to reduce the deficit-to-GDP ratio to 3.7% by 2028.