PH Budget Deficit To Narrow

Fitch Solutions forecasts a reduction in the Philippines' budget deficit as efforts to expand the tax base gain momentum, according to financial analysis by BMI Research, a unit of Fitch.

BMI anticipates the budget deficit to decrease to 5.5 percent of GDP in 2024, down from 6.2 percent in 2023, marking the third consecutive year of narrowing deficits due to fiscal consolidation efforts.

Revenue collection is expected to exceed targets, reaching PHP 4.27 trillion this year, driven by a broader tax base.

Last year, revenue collection surpassed expectations, reaching PHP 3.8 trillion, reflecting a 5.2 percent increase from the government's original target.

BMI anticipates the budget deficit to decrease to 5.5 percent of GDP in 2024, down from 6.2 percent in 2023, marking the third consecutive year of narrowing deficits due to fiscal consolidation efforts.

Furthermore, BMI projects a decline in the debt-to-GDP ratio from 61.1 percent in 2023 to 59.7 percent in 2024, with a further decrease to 52 percent by 2028. Economic growth is forecasted to reach 6.2 percent this year, with expectations of continued improvement driven by policies aimed at broadening the tax base.

Newly appointed Finance Chief Ralph Recto has pledged to sustain these efforts, aiming for revenue collection to reach PHP 6.078 trillion by 2028, amounting to approximately 16.3 percent of GDP.

Meanwhile, expenditures are projected to average 20.2 percent of GDP until the end of President Ferdinand R. Marcos Jr.'s term in 2028.

The administration's commitment to maintaining infrastructure spending between 5-6.0 percent of GDP is seen as crucial for achieving growth targets and positioning the Philippines as an attractive destination for foreign investment.

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