Economic Woes as Philippines Government Debt Increases
The Philippines faces mounting economic challenges, as highlighted by the recent surge in the national government’s budget deficit. In May, the deficit expanded to PHP174.9 billion from PHP122.2 billion in the same month last year, marking a 43.10 percent increase. This rise resulted from government expenditure outpacing revenue collections.
The Bureau of the Treasury (BTr) attributes this higher deficit to accelerated government spending. Disbursement growth hit 22.4 percent, thus, outstripping the 14.59 percent revenue expansion. State collections in May totaled PHP382.1 billion, a 14.59 percent increase from last year, buoyed by higher non-tax collections. Year-to-date collections reached PHP1.9 trillion, a 16.34 percent improvement over the previous year. Out of which 85.59 percent came from taxes and the rest from non-tax sources.
National government expenditures reached PHP557 billion in May, a 22.24 percent rise from the previous year’s PHP455.7 billion. This increase stemmed largely from capital outlay projects by the Department of Public Works and Highways and the Department of National Defense, alongside social and health programs from the Department of Social Welfare and Development and the Department of Health. Additionally, higher national tax allotment shares for local government units and increased budgetary support to government-owned corporations contributed to the spending surge.
Interests on government debt affecting economic worries
From January to May, total state expenditures amounted to PHP2.3 trillion. This figure is an increase of 17.65 percent from PHP1.9 trillion in the same period of 2023. Primary expenditures for May reached PHP495.9 billion, growing 19.69 percent year-on-year. Interest payments for the month stood at PHP61.1 billion. This is a 47.78 percent increase due to additional debt and higher interest rates.
For the first five months of the year, the fiscal deficit widened to PHP404.8 billion. This was up 24.06 percent from the PHP326.3 billion recorded in the same period last year.
The Aurora Pacific Economic Zone and Freeport Authority (APECO) struggles with unfinished infrastructure projects worth PHP796 million. Thus, adding to the economic strain. Delays and contract terminations have stalled progress. These have impacted the development of crucial facilities and utility projects needed to attract investments and support economic growth.
While the government promotes New Clark City as an alternative economic hub, businesses still see Metro Manila as the country’s primary economic center for the next decade. Despite efforts to decentralize, challenges such as high infrastructure costs and traffic congestion persist, requiring coordinated efforts to ensure sustainable growth and economic stability.
