Philippine government deficit declined but exceeded limit in 2024
The Marcos administration posted a smaller budget shortfall in 2024, but it was not enough to contain the deficit within the government’s limit as unexpected expenses pushed up total state spending.
Latest data from the Bureau of the Treasury (BTr) showed that the budget gap had dipped by 0.38 percent to around P1.51 trillion last year.
As a share of gross domestic product (GDP), the deficit improved to 5.7 percent last year, from 6.22 percent in 2023. But it still indicated that the government had spent beyond its means, requiring more borrowings that pushed the state’s outstanding debt load to P16.05 trillion by the end of 2024.
Notably, last year’s shortfall overshot the deficit ceiling of P1.48 trillion, or 5.6 percent of GDP, that was set by the Marcos administration.
Explaining the wider-than-programmed budget hole, the BTr said expenses charged to unprogrammed appropriation—which can be used to fund unexpected or priority expenses when there’s excess revenue—pushed up the overall state spending beyond target.
Enlarged spending
Figures showed disbursements had grown by 11.04 percent to P5.92 trillion, way above the revised spending limit of P5.75 trillion. Of that amount of expenditures, P5.16 trillion went to productive spending on programs and projects, while P763.3 billion was used to pay interest costs on government debts.
The overspending was due to higher infrastructure expenditures, as well as the first tranche of salary adjustments for qualified state workers pursuant to an August 2024 executive order, the BTr said.
The government also had to dip into unprogrammed funds to finance “additional” expenses like emergency benefits and allowances for health and nonhealth workers and assistance to rice farmers, among others.
Meanwhile, total revenue collections rose by 15.56 percent to P4.42 trillion, beating the target receipts of P4.27 trillion by 3.49 percent.
By major collecting agencies, the Bureau of Internal Revenue generated P2.85 trillion last year, up by 13.29 percent and exceeding its goal of P2.85 trillion. The BTr said this performance was driven by value-added tax collections and higher receipts from personal income tax.
However, the Bureau of Customs’ P916.7-billion haul last year fell short of its P939.7-billion target due to reduced tariff on rice and selected electronic vehicles. The extension of lower import duties on meat products also weighed on the agency’s collections.
But compared with a year ago, customs revenues went up by 3.79 percent.
For this year, the Marcos administration—which is targeting an upgrade to “A” credit rating within its term—has set a fiscal deficit ceiling of P1.54 trillion, equivalent to 5.3 percent of GDP.
