MANILA — The Philippine national government's budget deficit widened slightly in September, even as double-digit revenue growth outpaced the rise in government spending, the Bureau of the Treasury (BTr), which manages the government's cash and borrowings, said.

Data released on Thursday showed the fiscal gap inched up by 0.33% to P248.9 billion in September from P248.1 billion in the same month a year earlier. A budget deficit measures how much spending outpaced revenues in a given period, with the shortfall typically financed through borrowing.

"The deficit marginally increased as expenditure grew by P37.3 billion year on year and tapered by a P36.5-billion increase in total revenues," the BTr said.

Month on month, the deficit ballooned by 54.35% from the P161.3-billion shortfall recorded in August.

September Revenues

Total revenue collections jumped by 12.95% to P318.2 billion in September from P281.7 billion a year earlier, supported by double-digit growth in both tax and nontax revenues.

Tax revenues, which accounted for 93.68% of total collections, increased by 12.11% to P298.1 billion from P265.9 billion a year ago. Collections by the Bureau of Internal Revenue (BIR) rose 11.18% to P203.4 billion from P183 billion in the same month last year, while the Bureau of Customs' take went up by 14.76% to P92.1 billion from P80.3 billion a year earlier.

The Treasury attributed the sustained growth in Customs collections to "peso depreciation and higher oil prices, as well as enforcement measures, improved valuation and assessment, and continued customs modernization."

Nontax revenues — collections outside the tax system, such as fees, charges, and income from government operations — surged by 27.22% to P20.1 billion in September from P15.8 billion a year earlier. Broken down, BTr income increased by 5.74% to P8.2 billion from P7.8 billion a year ago, while nontax revenues from other offices surged by 47.94% to P11.9 billion from P8 billion.

September Expenditures

Government expenditures increased by 7.04% to P567.1 billion in September from P529.8 billion a year earlier amid the "continuing implementation of education, health, and social protection services, as well as an uptick in infrastructure expenditures," the Treasury said.

It added that local government units' higher share of National Tax Allotments — the legally mandated share of national tax collections remitted to LGUs — and the Annual Block Grant to the Bangsamoro Autonomous Region in Muslim Mindanao also contributed to the increase in spending.

Primary expenditures, which exclude interest payments, rose by 7.46% to P481.5 billion from P448.1 billion a year earlier, accounting for 84.91% of total disbursements. Interest payments — the cost of servicing the government's outstanding debt — increased by 4.74% to P85.6 billion from P81.7 billion in the same month last year.

Excluding interest payments, the government recorded a primary deficit of P163.3 billion in September, narrowing by 1.84% from the P166.4-billion shortfall a year earlier.

Nine-Month Gap

For the January-to-September period, the budget deficit widened by 16.64% to P1.303 trillion from P1.117 trillion in the same period last year, BTr data showed.

The nine-month shortfall exceeded the government's P1.206-trillion deficit program by 8.08%, or P97.4 billion — an overshoot that reflects revenues falling slightly short of program even as spending ran above it. It also represented 78.56% of the P1.66-trillion full-year deficit ceiling approved by the Development Budget Coordination Committee, the interagency body that sets the government's macroeconomic and fiscal program, in May. With just over a fifth of the ceiling left, the final quarter's revenue and spending performance will determine whether the government lands within the full-year P1.659-trillion program.

Total revenue collections for the nine-month period grew by 4.99% to P3.535 trillion from P3.367 trillion a year earlier, but came in 0.95% below the P3.569-trillion nine-month revenue target, accounting for 73.54% of the P4.807-trillion full-year revenue program.

As of end-September, tax revenues rose by 5.64% to P3.225 trillion, representing 91.23% of total collections. BIR collections increased by 5.12% to P2.442 trillion, although these remained 2.68% below the agency's nine-month target. Customs collections climbed by 7.77% to P756.2 billion, exceeding the P748.5-billion target by 1.03%.

Nontax revenues dipped by 1.32% to P309.9 billion from P314.1 billion a year earlier, although these exceeded the nine-month program by 10.04%.

Meanwhile, nine-month government expenditures increased by 7.9% to P4.838 trillion from P4.484 trillion a year earlier. This exceeded the P4.775-trillion spending program for the first nine months by 1.33% and accounted for 74.82% of the revised P6.466-trillion full-year disbursement target.

Primary expenditures rose by 6.49% to P4.066 trillion as of end-September, while interest payments jumped by 15.95% to P772.1 billion. The nine-month primary deficit widened by 17.67% to P531.2 billion from P451.4 billion a year earlier.

Economist's Assessment

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the country's fiscal challenges partly to sluggish economic growth following government underspending since late 2025.

In a Viber message, he said catch-up government spending, particularly on infrastructure, could help "pump-prime the economy back to the usual 5% levels," improve tax collections, narrow the budget deficit, and reduce the debt-to-gross domestic product ratio.

Mr. Ricafort also called for stronger tax collection efforts and fiscal reforms, with new or higher taxes considered only a last resort.

"More disciplined NG spending also needed to narrow the budget deficit and curb the growth in outstanding debt in terms of anti-corruption measures," he said.

The government has set its fiscal deficit ceiling at P1.659 trillion, or -5.4% of gross domestic product, this year.

Reporting by Justine Irish D. Tabile, Senior Reporter, for BusinessWorld. Source: BusinessWorld