PH budget deficit projected to hit 5.5% of GDP in 2024

The Philippine fiscal deficit is expected to narrow this year as revenue collection is likely to overshoot target and continue to bring the country’s debt level lower in the coming years, Fitch Group unit BMI said.

In a report released Tuesday, BMI said it expects the Philippine budget deficit to hit 5.5% of the country’s gross domestic product (GDP) this year, lower than the 6.2% recorded in 2023.

“This narrowing would mark the third consecutive year the budget shortfall shrinks, a reflection of the current administration’s push for fiscal consolidation,” the report read.

This comes as BMI expects the economy to grow by 6.2% this year, in line with the government’s downgraded target of 6.0% to 7.0% from the previous 6.5% to 7.5% target range.

Government debt was recorded at 61.1% of the GDP in the past year, which BMI expects to decline to 52.0% by the end of the current administration led by President Ferdinand “Bongbong” Marcos Jr. in 2028.

BMI said it expects the country to continue having more revenue collection than targeted over the coming year, as it cited policies that seek to broaden the tax base feed. It projects revenue collection to hit 16.3% of the GDP by end-2028.

In terms of expenditures, BMI projects this to average 20.2% by end-2028, as the administration has committed to keep its infrastructure spend between 6.0% to 6.0% of GDP.

“Enhancing the infrastructure framework is crucial for the current administration’s ambitious goal of positioning the Philippines as a leading destination for foreign investment,” it said.

Latest data available from the Bureau of the Treasury (BTr) showed that the national government’s debt stock was at P15.18 trillion as of end-February, up 2.63% from P14.8 trillion from the previous month. —KBK, GMA Integrated News