The national government’s budget deficit in the first quarter of the year widened by 75.62 percent to P478.8 billion, marked by sharp rise in public expenditures, the Bureau of the Treasury (BTr) said on Tuesday evening.
The BTr data showed that the deficit in January-March was significantly higher than the P272.6 billion shortfall in the same period a year earlier.
Expenditures surged 22.43 percent year-on-year to P1.477 trillion as of end-March 2025 from P1.206 trillion in the year-earlier period.
Revenue rose 6.9 percent to P998.2 billion from P933.7 billion in the comparative period.
In March alone, the budget deficit widened by 91.78 percent to P375.7 billion from P195.9 billion in the same period in 2024.
Expenditures spiked by 35.37 percent to P655 billion from March 2024’s P483.8 billion, while revenue dropped 3.01 percent to P279.3 billion from P287.9 billion due to lower non-tax revenue collection.
John Paolo Rivera, a senior research fellow at the Philippine Institute for Development Studies, said revenue growth did not keep pace with surging expenditure for infrastructure and election-related dusbursements.
“While frontloading expenditures can stimulate the economy, the sustainability of this pace depends on the government’s ability to expand its revenue base without compromising debt metrics,” he said.
Rivera said a persistently widening fiscal gap could eventually pressure debt servicing costs and limit fiscal flexibility, making it crucial for the management to enhance tax effi-ciency and control leakages in the months ahead.
Infrastructure disbursements
For his part, Reinielle Matt Erece, economist at Oikonomia Advisory & Research Inc., at-tributed the widening deficit to the large disbursements for infrastructure for the first quar-ter.
Erece said the government, in the short term, was able to generate the needed fiscal space to achieve their planned projects especially in infrastructure through bonds.
“However, in the long term, this will increase the government’s debt burden as they will also have to finance debt repayments apart from their projects social and economic develop-ment,” Erece said.
Borrowing need
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said that fundamen-tally, wider budget deficits could increase the need for additional borrowings by the nation-al government.
“Additional tax revenue collections based on existing tax laws or through new tax reform measures and even higher tax rates would be needed, especially if inflation becomes more benign and better controlled since higher taxes could add to inflationary pressures,” he said.
“There may also be a need for more fiscal reform measures to reduce government expenses such as rightsizing of the government and tax reform measures to further increase structur-al/recurring tax revenue collections to narrow the budget deficit and curb additional need for borrowings/debt,” he added.
Revenue enhancement
The BTr said agencies sustained revenue growth for the third consecutive month, driven by their ongoing revenue enhancement measures, particularly the intensified campaign against the use of fake receipts, intensified crackdown on illicit trade, digitalization and improvements in tax payment facilitation.
In particular, the Bureau of Internal Revenue recorded 16.67 percent growth in tax collec-tions, reaching P690.4 billion in the first quarter of 2025. This was due to higher collections from personal income tax corporate income tax, percentage taxes, value-added tax (VAT), excise taxes, documentary stamp tax and percentage taxes, the BTr said.
On the other hand, the Bureau of Customs posted a 5.72 percent increase, amounting to P231.4 billion, which the BTr said was due to higher VAT from non-oil imports and excise tax collections from oil and non-oil imports.
Non-tax revenues
Meanwhile, non-tax revenues contributed P66.7 billion in the first quarter of the year, lower than last year’s level by 41.21 percent, which the BTr said was due to timing as 18 GOCCs remitted P28.23 billion in dividends back in the first quarter of 2024 compared with only three GOCCs adding P0.027 billion in early dividends for the current year.
“Nevertheless, non-tax revenues are expected to improve in the succeeding months, with dividends from the GOCCs set to be remitted to the National Treasury starting May 2025,” the BTr said.
Strong spending
The BTr said the strong spending performance in the first quarter can be attributed to the higher disbursements recorded in several departments as well as. fiscal transfers to local government units (LGUs), the Bangsamoro Autonomous Region in Muslim Mindanao,and the Local Government Support Fund releases.
“The transfer of P32.8 billion to the Coconut Farmers and Industry Trust Fund in accord-ance with the mandated schedule of capitalization contributed to the larger spending out-turn,” the BTr said.
Primary expenditures, or expenses net of interest payments, for the first quarter of 2025 reached P1.236 trillion, a 21.96 percent jump over last year’s total of P1.013 trillion.
