By Katherine K. Chan, Reporter
THE PHILIPPINES’ budget deficit nearly doubled in August as government spending picked up while revenue collections slipped, the Bureau of the Treasury (BTr) said.
BTr data released on Thursday showed that the deficit swelled by 90.23% to P161.3 billion in August from P84.8 billion a year ago.
Month on month, it widened by 51.74% from P106.3 billion.
In a statement, the Treasury said the wider deficit came as the government had to settle the Philippine Health Insurance Corp.’s overdue debt, driving its overall spending higher.
“The increase in August was driven by a 16% year-on-year spike in expenditures, mainly due to the settlement of the Philippine Health Insurance Corp.’s (PhilHealth) arrears, while revenue collections declined by 1.85% (P6.5 billion) due to lower nontax revenues,” it said.
In August, government expenditures rose by 16% to P507.3 billion from P437.3 billion in the same month last year.
“The increase was mainly driven by the P58.6-billion budgetary support to PhilHealth for the health insurance premium of indigents, senior citizens, and point-of-service patients enrolled under the National Health Insurance Program,” the BTr said.
“The larger National Tax Allotment shares of Local Government Units also contributed to the growth of disbursements in August 2026,” it added.
Broken down, primary spending — which refers to total expenditures minus interest payments — went up by 18.03% to P441.6 billion from P374.2 billion a year ago.
This as interest payments picked up by 3.98% to P65.6 billion in August from P63.1 billion in the prior year.
According to the BTr, interest payments increased as higher coupon servicing on additional domestic debt securities offset the National Government’s (NG) reduced foreign payments, which fell after the settlement date for global bonds debt servicing was shifted.
On the other hand, total revenue collections dropped by an annual 1.85% to P346 billion in August from P352.5 billion a year ago, as tax revenues inched up by 0.32% to P332.3 billion.
BTr data showed Bureau of Internal Revenue (BIR) receipts slipped by an annual 0.7% to P248.4 billion in August, due to higher tax refunds.
Collections by the Bureau of Customs (BoC) went up by 4.15% to P80.7 billion during the month.
Nontax revenues plunged by 35.59% to P13.7 billion in August. This came as the BTr’s profit went down by 29.15% to P5.5 billion from P7.7 billion, while earnings from other offices fell by 39.23% to P8.3 billion from P13.6 billion.
Treasury data also showed that the primary deficit ballooned by more than fourfold (341.47%) to P95.6 billion in August from P21.7 billion in the prior year.
Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said the wider fiscal gap in August was likely part of the National Government’s push to ramp up spending.
“The latest data suggest that the government remains focused on supporting growth through public spending,” he said in a Viber message. “While this has resulted in a wider fiscal deficit, the more important issue is whether the spending translates into stronger economic activity, job creation, and improved revenue generation over the medium term.”
The NG has said that they are in catch-up spending mode as part of efforts to spur economic growth in the second half of the year following four straight quarters of slowdown.
EIGHT-MONTH GAP
In the first eight months of the year, the deficit widened by 21.3% year on year to P1.054 trillion from P869.2 billion. This accounted for 63.55% of the government’s P1.659-trillion ceiling for the year.
Expenditures jumped by 8.01% to P4.271 trillion as of end-August from P3.954 trillion a year ago. This was equivalent to about 66.05% of the government’s P6.466-trillion 2026 expenditure program.
Primary expenditure grew by 6.36% to P3.58 trillion from P3.37 trillion, while interest payments jumped by 17.52% to P686.5 billion from P584.1 billion.
Meanwhile, revenue collections in the January-to-August period rose by 4.27% to P3.217 trillion from the P3.085 trillion posted a year prior. This makes up 66.92% of the administration’s P4.807-trillion full-year target.
Tax revenues edged up by 5.03% to P2.927 trillion, comprising 65.89% of the NG’s P4.442-trillion annual goal.
Broken down, BIR collections climbed by 4.6% to P2.238 trillion as of August, while BoC collections grew by 6.87% to P664.1 billion.
Meanwhile, nontax revenues in the eight-month period slid by 2.83% to P289.8 billion from P298.3 billion last year. This accounted for 79.37% of the government’s P365.109-billion annual target.
Treasury income was up 9.34% annually to P207 billion, surpassing the P202.278-billion full-year goal.
Meanwhile, other offices’ revenues during the period declined by 23.96% to P82.9 billion.
As of August, the country’s primary deficit widened by 29.05% to P367.8 billion from P285 billion.
For Mr. Ravelas, the NG can improve its fiscal position by ensuring it properly executes growth-enhancing spending.
“Fiscal discipline remains important, but growth-enhancing expenditures can ultimately strengthen the government’s fiscal position if executed effectively,” he said.
The government set its fiscal deficit ceiling at P1.659 trillion or -5.4% of GDP this year.
Last month, Finance Secretary Frederick D. Go said the government is on track to meet its fiscal gap target for the year as they see the deficit narrowing to -5.44% of GDP in the second half.
The Marcos administration wants to lower the country’s deficit-to-GDP ratio down to 3.5% by 2030 through fiscal consolidation.
