Budget gap shrinks to P1.5 trillion

But still higher than government expectation

MANILA, Philippines — The country’s budget shortfall narrowed slightly in 2024, with its share to the overall economy also improving from a year ago, according to the Bureau of the Treasury.

BTr data showed that the budget deficit in 2024 eased by 0.4 percent to P1.506 trillion from the 2023 level of P1.512 trillion as the growth in revenues managed to outpace overall state spending.

In turn, the budget deficit, when measured against the gross domestic product (GDP), eased to 5.7 percent in 2024 from 6.2 percent in 2023. This developed after the economy expanded by 5.6 percent.

However, the latest budget deficit figure is 1.48 percent higher than the government expectation of a P1.48-trillion shortfall penciled in December last year.

Similarly, the deficit-to-GDP ratio is also above the 5.6 percent target of the Cabinet-level Development Budget Coordination Committee.

The narrower deficit means the government is still spending beyond what it earned from revenue collections, although at a much softer pace.

This year, the economic team expects a higher budget deficit of P1.54 trillion and lower deficit-to-GDP ratio of 5.3 percent.

Meanwhile, the government’s total revenue collection last year improved by 15.6 percent to P4.42 trillion as against the P3.82 trillion in 2023, with the Bureau of Customs (BOC) and Bureau of Internal Revenue (BIR) both posting increases.

The amount is also 3.49 percent higher than the revised full-year program of P4.27 trillion.

The bulk of revenues came from tax collections at P3.8 trillion, up by 10.8 percent. Non-tax collections also improved by almost 57 percent to P618 billion in 2024.

BIR’s haul grew by 13.3 percent to P2.85 trillion while the BOC saw its collection rise by 3.8 percent to P916.7 billion.

BIR slightly exceeded its target collection of P2.84 trillion, driven by higher value-added tax (collections, personal income tax collections, corporate income tax, tax on bank deposits and documentary stamp tax).

The BOC fell short by 2.5 percent from its P939.7-billion programmed collection largely due to the reduced tariff on rice and selected electric vehicles as well as the extension of lower tariff on meat products.

Further, income generated by the Treasury went up by 24.5 percent to P283.4 billion on the back of higher dividend remittances, interest advances from government-owned and controlled corporations, guarantee fees and the government’s share from PAGCOR profits.

Collection from other offices including privatization proceeds and fees and charges, doubled to P335 billion from P167.2 billion.

On the other hand, government spending in 2024 went up by 11 percent to P5.93 trillion from P5.34 trillion a year ago.

The figure is likewise 2.97 percent higher than the programmed P5.75 trillion supposed expenditures last year, driven by infrastructure spending, maintenance and other operating expenses for various health and social protection programs as well as personnel services expenditures.