By Aubrey Rose A. Inosante, Reporter

THE National Government’s (NG) budget deficit likely came in within the P1.52-trillion ceiling in 2024 as spending expected to have surged in December, analysts said.

“Possible, as a function of government spending growth, which tends to pick up towards the end of the year, as seen in recent years,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

The Bureau of the Treasury reported that the budget deficit widened to P1.18 trillion in the first 11 months, from P1.11 billion a year earlier.

In November, the budget deficit more than doubled to P213 billion due to weak revenue collections and a pickup in spending.

Mr. Ricafort noted that the risk remains of a breach of the ceiling with large budget deficits of at least P300 billion posted every December since 2020.

He noted the “record monthly budget deficit” of P401 billion posted in December 2023.

John Paolo R. Rivera, senior research fellow at the Philippine Institute for Development Studies, said the NG is “likely to hit its P1.5-trillion deficit ceiling for 2024.”

“While spending will increase, stronger-than-expected revenue collections and efforts to manage non-essential spending might help keep the deficit within target,” Mr. Rivera said via Viber message.

He also said the budget deficit for the remaining month will “remain elevated” but expects revenue to improve towards year’s end due to corporate tax settlements and other collections, “but may not be enough to offset the spending surge.”

He called the P4.38-trillion revenue target “challenging but achievable” if the collections in the last month remain strong.

“This is because December typically sees a surge in government spending, particularly for infrastructure projects, social services, and year-end bonuses for government employees. This seasonal trend will likely push spending higher,” he added.

“The projection in the Philippine Development Plan is for the budget deficit to be lower this year due to increased tax take, but we will still have an actual deficit,” Ateneo School of Government Dean Philip Arnold P. Tuaño told BusinessWorld on Wednesday.

A surplus — in which government revenue outweighs spending, would be difficult this year, he said.

“Since this is an election year, we expect expenditures to significantly increase at the start of the year before slowing just before elections,” Mr. Tuaño said.

Meanwhile, Public finance expert Zyza Nadine M. Suzara said the actual deficit will depend largely on the government’s spending efficiency.

She said that the NG often accelerates its disbursements towards the end of the year to prevent unspent funds from being returned to the Treasury.

However, Ms. Suzara said a lower-than-programmed deficit is also not necessarily a good thing especially if revenue targets are not exceeded.

“Since the government isn’t actually expecting excess revenue, the lower-than-programmed deficit might be due to inefficiency,” she added.

For 2025, the budget deficit may narrow slightly but will remain substantial, Mr. Rivera said, due to increased revenue collections from tax measures such as the value-added tax (VAT) on digital services and measures targeting luxury consumption.

President Ferdinand R. Marcos, Jr. recently signed Republic Act No. 12023, which imposes a 12% VAT on foreign digital service providers and aims to collect P105 billion between 2025 and 2029.

He also said that stronger economic growth this year could boost revenue but any slowdown whether due to global headwinds or domestic challenges could negatively affect collections.

“The expected deficit in 2025 will be slightly less than P1.200 trillion so the required financing might be lower,” Mr. Tuaño said, adding that lower interest rates in the previous months allow the NG to raise the needed resources.

THE GOVERNMENT’S 2025 spending plan may not support the administration’s social and economic priorities as “budget politics” continues to affect allocations, GlobalSource Partners said.

“These budget politics in the Philippines are no less than a zero-sum game,” GlobalSource Country Analysts Diwa C. Guinigundo and Wilhelmina C. Mañalac said in a report.

“Because in maintaining the favorite items of legislators for public works projects, there can only be so much left to be allocated to education, health and other key social amelioration projects possibly even transgressing the Constitution and the laws of the land,” they said.

On Dec. 30, President Ferdinand R. Marcos, Jr. signed the P6.326-trillion budget bill while vetoing P194 billion worth of line items. He also rejected P168.24 billion in “unprogrammed” spending items, which will go through only if the government finds sufficient revenue.

The budget gave the highest allocation of P1.055 trillion to education, followed by the Department of Public Works and Highways (DPWH) with P1.007 trillion.

The bicameral conference committee version of the bill gave the DPWH P1.1 trillion compared to P737-billion budget of the Department of Education (DepED), in violation of the constitution, which requires that education receive top priority in public spending.

“On the basis of President Marcos’ pronouncements on the budget, he vowed to restore the amounts slashed from the DepEd expenditure program. However, he seems to be convinced that the zero subsidy for Philippine Health Insurance Corp. (PhilHealth), should remain,” the opposition-affiliated 1 Sambayan pressure group said.

Mr. Guinigundo and Ms. Mañalac, noting that the subsidy reduction was justified by the health insurer’s P400 billion in reserve funds, called this reasoning “absurd” because the reserve funds are intended to cover any PhilHealth liabilities that may arise.

“Other civic organizations including the Makati Business Club also found objectionable the retention of the AKAP (Ayuda para sa Kapos ang Kita program) or the social amelioration fund,” they added, noting that these funds are prone to abuse.

“In the first place, if AKAP is for the poor and should be retained, several quarters are in a quandary why in the first place the health subsidy to PhilHealth was zeroed out when better coverage from the health insurance directly benefits the poor.”

The GlobalSource analysts said that with the reduction in infrastructure projects, it may look like the education sector will be receiving a slightly higher priority in compliance with the Constitution. However, PhilHealth’s zero subsidy puts the 2025 budget in violative of the Constitution and various laws.

“In the absence of a law on confidential and intelligence funds, appropriations for these items are also questionable. It is also obvious that the President decided not to touch the higher allocations to both the House of Representatives and the Senate,” they said.

They warned that programs addressing poverty, education quality, health, income inequality, and fiscal sustainability are likely to worsen.

“In keeping the fundamental allocations and priorities of the original version, the President seems to have failed to address 1Sambayan’s call for him to ‘reconvene the bicameral conference committee’ and correct those “glaring anomalies” in the budget,” they said.

According to the Department of Budget and Management, the spending plan increased 10.1% from the year-earlier P5.768 trillion.

However, social services spending, which will provide funding for education, culture and manpower development, health, social security, welfare, and employment, was not given increased allocations and stayed at P2.121 trillion.

Meanwhile, economic services funding grew to P1.853 trillion, followed by general public services at P1.083 trillion and debt servicing P876.7 billion. — Aubrey Rose A. Inosante