The national government budget surplus narrowed 22.27 percent in January 2025 from a year earlier as growth in expenditures registered a faster year-on-year increase than that of revenues, the Bureau of the Treasury (BTr) reported on Tuesday.
The latest cash operations report released by the BTr showed the government incurred a budget surplus of P68.4 billion in January 2025, down from the P88 billion surplus reported in the year-earlier period.
January is seasonally a “surplus month for the government since this is often the peak month for tax collections in the country,” Ateneo de Manila University economist Leonardo Lanzona told Malaya Business Insight.
The deadline for filing and payment of annual income taxes for the previous year typically falls due in April, “but advance payments and other tax collections (e.g., value-added tax, excise taxes) are often robust in the first quarter (when the holiday fever is still felt),” the economist said.
Revenue collecting agencies usually report higher collections during this period, Lanzona added.
Manila’s expenditures increased 19.45 percent to P398.8 billion from P333.9 billion a year earlier, while revenues rose
10.75 percent to P467.1 billion from P421.8 billion.
“A January surplus is typical due to front-loaded revenue collection and moderate spending,” John Paolo Rivera, Philippine Institute for Development Studies senior research fellow, said in a separate interview.
The accelerated pace of expenditures reflects the government’s commitment to sustaining economic momentum, infrastructure rollout and social services,” Rivera said.
“However, sustainability hinges on revenue performance in the coming months. If revenue growth lags spending for an extended period, it could pressure the fiscal deficit and necessitate higher borrowings, potentially challenging the fiscal consolidation path,” Rivera added.
The robust spending performance in January was attributed to disbursements on progress billings of completed infrastructure and other capital outlay projects of the Department of Public Works and Highways, the implementation of various health and social protection programs as well as expenses incurred by the Commission on Elections ahead of local and national elections in May 2025.
“Higher National Tax Allotment releases and subsidies to government corporations also contributed to the significant growth of disbursements in January, as well as an uptick in interest payments that merely reflects a shift in coupon payment timing due to the issuance strategy of multiple re-offerings of treasury bonds originally issued in January last year to improve secondary market trading activity,” the BTr said.
Primary expenditures, excluding interest payments, reached P294.4 billion in January 2025, up 13.37 percent from P259.6 billion a year earlier.
Govt revenues
Collections by the Bureau of Internal Revenue (BIR) rose to P355.1 billion from P308.4 billion in the same comparable period.
The 15.13 percent year-on-year increase was mainly driven by higher value-added tax (VAT) collections, followed by gains in income taxes, other taxes and percentage taxes, the BTr said.
“Growth is also attributed to the bureau’s intensified collection efforts, aggressive illicit trade campaigns and digital transformation projects,” the bureau said.
Similarly, the P79.3 billion raised by the Bureau of Customs (BOC) in January 2024 represented a 7.98 percent increase from P73.4 billion, which the BTr said was underpinned by the Customs bureau’s modernization program.
Customs’ higher VAT and excise collections helped neutralize the impact of lower tariffs on imported rice, mandated by Executive Order No. 62, the Treasury said.
Non-tax revenues stood at P29.6 billion, down 19.16 percent to P36.6 billion. This was largely the impact of a base effect, a one-time gains recorded in January 2024.
External factors
External factors could have an impact on government spending and revenue performance, Rivera said.
“For instance, higher global interest rates could raise borrowing costs, increasing interest payments and narrowing fiscal space. Meanwhile, global economic softness could impact trade and remittances, thereby dampening revenue from imports, consumption, and corporate taxes,” the senior research fellow said.
“The key will be balancing growth-supportive spending with prudent fiscal management, while leveraging digitalization and tax reform to sustain revenue streams. Monitoring global risks such as oil price volatility, geopolitical tensions and external demand shifts will be crucial for fiscal planning ahead,” he added.
This is only the beginning, Lanzona said, pointing out that this is only the January 2025 budget deficit.
“As government expenditures come in full swing in the next few months, budget deficits will begin to be experienced,” he added.
