The Philippine government's budget deficit widened in March as the administration increased spending on energy crisis relief measures triggered by the ongoing Middle East war, according to the Bureau of the Treasury (BTr).
The fiscal gap rose by 1.96 percent to P349.7 billion in March from a year earlier, driven by a 5.23 percent increase in expenditures to P654.8 billion—the highest monthly spending so far this year.
However, the first-quarter deficit narrowed by 20.3 percent to P355.5 billion, thanks to robust revenue collection and more measured spending compared to last year. The year-to-date deficit now stands at 22 percent of the P1.61 trillion full-year program.
The Department of Energy received P20 billion to fund response measures after the government declared a state of national energy emergency due to the escalating conflict in the Middle East. Higher national tax allotment shares for local governments and releases for their special shares in tobacco excise tax proceeds also contributed to the spending surge.
Revenue collections grew 9.25 percent to P305.1 billion, supported by gains in both tax and nontax collections. The Bureau of Internal Revenue and the Bureau of Customs contributed P187.3 billion and P84.8 billion, respectively. Nontax revenues surged 45.54 percent to P28.5 billion, boosted by early dividend remittances from state-owned corporations.
"While revenues posted solid growth in March, it was not enough to fully offset the pickup in disbursements, resulting in a marginally wider monthly deficit," said Carlo Asuncion, chief economist at UnionBank of the Philippines.
Looking ahead, Asuncion warned that the oil shock may exert upward pressure on the fiscal deficit due to targeted government interventions. "While the deficit could widen modestly in the coming months, any impact from oil-price mitigation measures is expected to be manageable and consistent with the government's full-year fiscal objectives," he said.
He added that these interventions are designed to be temporary and well-targeted, rather than a permanent expansion of spending. The improved revenue position, driven by stronger tax administration and higher nontax inflows, provides fiscal space to absorb short-term pressures.