Energy crisis widens gov’t budget deficit

The Middle East war widened the government’s budget deficit in March as the government ramped up spending on energy crisis relief measures.

Latest data from the Bureau of the Treasury (BTr) showed that the fiscal gap increased by 1.96 percent to P349.7 billion in March.

However, the Marcos administration’s fiscal position still strengthened in the first quarter, as the deficit narrowed by 20.3 percent to P355.5 billion due to robust revenue performance and more measured spending compared with year-ago level.

This brought the year-to-date budget deficit to 22 percent of the P1.61 trillion full-year program.

Driving March’s wider deficit was a 5.23-percent increase in expenditures to P654.8 billion. This included allocations to the Department of Energy, which received P20 billion to fund response measures after the government had declared a state of national energy emergency amid escalating Middle East conflict.

Also contributing to higher spending were increased national tax allotment shares for local government units, as well as releases for their special shares in tobacco excise tax proceeds.

March expenditures marked the highest level so far this year.

Meanwhile, revenue collections rose 9.25 percent to P305.1 billion, supported by gains in both tax and nontax collections.

The Bureau of Internal Revenue and the Bureau of Customs contributed P187.3 billion and P84.8 billion, respectively.

Nontax revenues surged 45.54 percent to P28.5 billion, boosted by the early remittance of dividends from government-owned and controlled corporations.

“While revenues posted solid growth in March, it was not enough to fully offset the pickup in disbursements, resulting in a marginally wider monthly deficit,” said Carlo Asuncion, chief economist at UnionBank of the Philippines.

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As it stands, expenditures rose by P32.6 billion year on year in March, eclipsing the P25.8 billion increase in revenues.

Looking ahead, Asuncion said the oil shock may place upward pressure on the fiscal deficit due to targeted government interventions.

“While the deficit could widen modestly in the coming months, any impact from oil-price mitigation measures is expected to be manageable and consistent with the government’s full-year fiscal objectives,” he said.

“That said, these interventions are designed to be temporary and well-targeted, rather than a permanent expansion of government spending. Importantly, the government’s revenue position has improved, supported by stronger tax administration and higher nontax inflows, which provides fiscal space to absorb short-term pressures,” he added.

The Department of Budget and Management earlier said it has earmarked about P238 billion for the crisis, sourced from automatic and continuing appropriations in the 2026 national budget. It has also ordered a 20-percent cut in nonessential government spending to create additional fiscal room.