Philippines’ budget gap widened in 2025 to P1.58T
MANILA, Philippines – The Philippine government exceeded its budget deficit target for 2025 as the shortfall widened by nearly five percent amid softer revenue collections.
In its latest cash operations report, the Bureau of the Treasury (BTr) said the full-year deficit widened 4.68 percent to P1.58 trillion, above the P1.56-trillion program set by the Development Budget Coordination Committee (DBCC) and the P1.51 trillion recorded in 2024.
But any further expansion due to weak revenues was tempered by restrained government spending amid the flood control corruption scandal.
READ: DBCC cuts growth targets for 2026-2028
The full-year deficit brought the ratio of deficit to gross domestic product (GDP) to 5.63 percent, a slight improvement from 5.70 percent the previous year, though it still exceeded the government’s 5.5-percent ceiling.
According to Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., the deficit is not yet a cause for grave concern as long as risks from higher borrowing costs, peso pressure, and reduced policy space are managed.
“What’s encouraging is that the deficit-to-GDP ratio improved, which means growth is helping absorb the gap—even if it’s still above target. The key issue now is quality, not just size: if borrowing funds infrastructure, jobs, and productivity, it’s manageable,” he said.
“Bottom line: this isn’t a crisis, but it’s a yellow light—government needs better revenue collection and a clear, credible plan to gradually narrow the deficit,” Ravelas added.
Ruben Carlo Asuncion, chief economist at UnionBank of the Philippines, shared the sentiment.
”Overall, the slight overshoot is not alarming, as it stems from temporary administrative and external factors rather than structural deterioration,” Asuncion said.
”However, the situation underscores the need to strengthen tax administration and support revenue recovery in 2026, especially with elevated interest payments continuing to place upward pressure on expenditures,” he added.
Revenues, expenditures
Total revenue collections reached P4.45 trillion, up 0.78 percent from 2024, but fell short of the 2025 program by nearly two percent. According to the BTr, the shortfall was driven by weaker tax collections that offset windfalls from non-tax revenues.
READ: Marcos administration tempers revenue targets through 2030
The government collected P4.08 trillion in taxes, about P130 billion below target, as both major tax agencies—the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC)—missed their targets by 3.41 percent and 2.72 percent, respectively.
“The BIR underperformance was partly due to a pause in payments for infrastructure-related government contracts amid investigations into flood control projects, which affected withholding taxes, as well as a temporary suspension of audit operations,” the BTr said.
“[The BOC fell short] due to weaker import volumes, the suspension of rice importation, and lower global oil and commodity prices,” it added.
Non-tax revenues totaled P376.3 billion, down nearly half from 2024, but still above the P306.5 billion goal, supported by robust operations and dividend collections from BTr income.
On the expenditure side, the government spent P6.03 trillion in 2025, higher than the previous year.
However, overall spending remained below the programmed level of P6.08 trillion due to tighter oversight of infrastructure projects linked to the flood control corruption scandal, which slowed disbursements. INQ
