The national government remains committed to its fiscal deficit targets, according to Finance Secretary Frederick Go, despite growing concerns about potential revenue shortfalls.
Secretary Go confirmed that the administration has not adjusted its deficit ceilings for the coming years, signaling a firm resolve to maintain fiscal discipline.
The current targets project a deficit of P1.65 trillion, representing 5.3% of the country’s gross domestic product, for 2026. This is followed by P1.6 trillion (4.8% of GDP) in 2027, and P1.55 trillion (4.3% of GDP) by 2028.
However, recent revisions to revenue collection goals by the Development Budget Coordination Committee have introduced a layer of complexity. These adjustments could significantly impact the government’s ability to consolidate its fiscal position.
The Bureau of Internal Revenue’s (BIR) collection target has been reduced by 4.14% to P3.431 trillion for the current year. Simultaneously, the Bureau of Customs’ (BoC) target has been trimmed by 1.07% to P1.003 trillion.
Detailed fiscal performance data, including the December figures and the full-year deficit, is scheduled for release on March 3rd through the Bureau of the Treasury’s cash operations report.
Through the first eleven months of the previous year, the budget deficit already reached P1.26 trillion, representing approximately 80.92% of the P1.56 trillion full-year target for that period.
Analysts are voicing caution, suggesting that the lowered revenue expectations from both the BIR and BoC will make achieving the 2026 deficit target considerably more difficult.
Jonathan Ravelas, a senior advisor at Reyes Tacandong & Co., highlighted that the combined reduction of approximately P160 billion in BIR and BoC goals diminishes the government’s revenue buffer. Without corresponding spending cuts or new revenue streams, the deficit is likely to expand.
Rizal Commercial Banking Corp. Chief Economist Michael Ricafort echoed this sentiment, characterizing the 5.3% fiscal deficit target for 2026 as “challenging to achieve” given the lower revenue projections.
External factors, including slower economic growth, geopolitical instability, and domestic political considerations, could further suppress tax revenues and exacerbate the budget gap.
In response to these challenges, Secretary Go has directed the Privatization and Management Office (PMO) to reassess government assets with a focus on identifying those most likely to be successfully sold.
The goal is to create a more pragmatic list of assets for privatization, maximizing the potential for revenue generation.
The government anticipates a substantial increase in revenue from its privatization program, projecting proceeds to surge to P101 billion in 2026, a significant jump from the P5 billion generated last year.
