By Justine Irish D. Tabile, Senior Reporter
NATIONAL GOVERNMENT (NG) the budget broke 2025 ceiling after gross tax agencies missed their collection targets and government spending was reduced amid corruption scandal, i The Bureau of the Treasury (BTr) said.
Data from the Treasury released on Tuesday showed that the budget deficit grew by 4.68% or P70.5 billion to P1.58 trillion in 2025 from P1.51 trillion in 2024.
It exceeded the deficit estimate of P1.56 billion set by the Development Budget Coordinating Committee for the year 2025 or by P15.1 billion.
“The deficit slightly exceeded the target for 2025 by 0.97% as the deficit of 1.48% in the collection of funds was partially reduced by restricting the use of funds, the actual issuance was kept below the planned level by 0.85%,” said the Treasury.
As of the end of 2025, the deficit as a share of gross domestic product (GDP) remained at 5.63%, which represents an improvement from 5.7% in 2024 but slightly higher than the 5.5% target.
BTr data showed revenue collection at 0.78% to P4.45 trillion, higher than the P4.42 trillion collected in 2024.
“Revenue collection decreased from the revised 2025 fiscal plan of P4.52 trillion by P67 billion, as the P69.8-billion surplus in nontax revenue was not enough to cover the P136.8-billion shortfall in tax collection,” he said.
Tax revenue, which accounted for 91.55% of total revenue, jumped 7.27% to P4.08 trillion by 2025, but 3.25% below the P4.52-trillion plan.
Once reduced, the Bureau of the Internal Revenue (BIR) collection increased by 9.06% year-on-year to P3.11 trillion from the P2.85 trillion collected in 2024.
“This growth was driven by strong collection of corporate income tax, personal income tax, value-added tax (VAT), stamp duty, and tobacco excise,” said the Treasury.
However, BIR collections were 3.41% lower than the P3.22-trillion annual target due to the suspension of payment of government contracts related to infrastructure amid the investigation of flood control projects and the temporary suspension of audit operations.
On the other hand, the Bureau of Customs’ (BoC) revenue increased by 1.75% to P932.7 billion in 2025 from P916.7 billion collected in the previous year, amid strengthened enforcement measures and better monitoring of import declarations.
“VAT remains the main driver of growth in import taxes, while the collection of goods is reposted year-on-year gains, effectively reducing the main effect of depreciation collection of taxes from other countries,” he said.
However, the BoC’s collections were 2.72% short of the P958.7-billion target for the year due to “import inflation, suspension of rice imports, and lower oil and commodity prices.”
Meanwhile, nontax income, which accounted for 8.45% of all receipts, decreased by 39.15% to P376.3 billion in 2025 from P618.3 billion in 2024. However, it exceeded the full-year target of P306.5 billion by 22.77%.
“This decrease is mainly due to the lack of one-time remittance received in 2024,” said BTr. “However, full-year nontax collections exceeded the revised target… mainly due to BTr’s targeted profitability performance, particularly in its operations and dividend collections.”
Treasury income fell 17.7% to P233.2 billion last year, due to the base effect of lower receipts and the impact of lower interest rates on investment income and deposit interest.
Despite the decline, BTr’s income still exceeded the P179.2-billion target for 2025 by 30.11% amid strong dividend outflows, income from managed funds, higher interest income from government deposits, and the collection of guarantee funds.
BTr also said this is due to NG’s share from the profits of the Philippine Amusement and Gaming Corp. and Manila International Airport Authority terminal fees.
Income from some of thefice decreased by 57.29% to P143.1 billion in 2025 but exceeded its P127.2-billion plan by 12.43%.
WELL SPENDING
Meanwhile, government spending increased by 1.77% to P6.03 trillion in 2025 from P5.93 trillion last year. This was 0.85% below the P6.08-trillion annual plan.
“The increase in spending is mainly due to higher allocations of National Tax Shares to local government units, interest payments, and staff service costs due to the implementation of the second phase of salary adjustment for qualified civil servants,” said BTr.
However, it said the lower-than-planned disbursement was due to “tight financial management, including tight oversight of infrastructure projects linked to corruption scandals.”
Primary spending – which refers to total expenses minus interest payments – was lower at P5.166 trillion last year from P5.162 trillion a year ago. It was also 1.3% short of the planned P5.23 trillion.
Interest payments fell by 13.21% to P864.1 billion by 2025 due to “additional borrowing to fund the deficit program and the repricing of pandemic debt at current high rates.” This is 1.9% higher than the P848 billion planned for 2025.
Full-year spending was 21.53% of GDP, slightly above the 21.45% target for 2025, but below the 22.41% seen in 2024.
DECEMBER FAILURE
In December alone, the NG budget deficit decreased by 4.96% to P313.2 billion from P329.5 billion in the same month in 2024.
Revenue collection fell by 3.31% to P304.3 billion in December as nontax revenue fell by 59.31% to P25.7 billion.
This is as the revenue of the Treasury decreased by 64.42% to P18 billion, and otherfice revenue decreased by 38.47% to P7.6 billion.
However, tax revenue jumped 10.73% in December to P278.6 billion as BIR collections increased 11.08% to P204.2 billion, and Customs collections increased 9.75% to P73.2 billion.
On the other hand, government spending decreased by 4.15% to P617.4 billion in December, as interest payments increased by 9.75% to P63.6 billion. Primary spending decreased by 5.53% to P553.8 billion.
The Chief Economist of Rizal Commercial Banking Corp. Michael L. Ricafort said last year’s budget would have been wider if it wasn’t for the fact that the government spent money on infrastructure.
“Going forward, the country’s risks, especially in the Middle East, could lead to inflation that could hamper government spending,” he said in a Viber message.
He said the government’s plan to consolidate spending, especially infrastructure, could also cause a budget deficit.
Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said the National Government’s slightly higher budget for 2025 was “primarily driven by weaker-than-expected tax collections, as spending remains below plan.”
“Despite these pressures, the disbursement was kept at 0.85% under the full year plan due to the strong supervision of the project, which shows that the expansion of the loss was based on the failure of income instead of overspending,” said Mr. Asuncion in a Viber message.
“Looking ahead to 2026, the financial situation is expected to improve slightly, supported by the recovery of tax efficiency as administrative disruptions decrease and continued efforts to consolidate funds, although higher interest payments – increased by 13.21% in 2025 – will remain a concern structural pressure,” he added.
