Fitch Solutions unit BMI on Tuesday projected that the country’s budget deficit is poised to narrow this year due to differences in growth assumptions.

In an emailed commentary, BMI expects the country’s budget deficit to narrow from 6.2 percent of gross domestic product last year to 5.5 percent of gross domestic product (GDP) this year.

“Our 2024 forecast is higher than official projections of 5.1 percent due to a disparity in growth assumptions. Our projection is for the economy to expand by 6.2 percent in 2024 while the government holds a more upbeat view on the economy at 6.5 percent to 8.0 percent,” BMI wrote.

Revenue collection

BMI also expects government revenue collection to continue surpassing its own expectations in the coming years as policies aimed at broadening the tax base take effect.

Government data showed that revenue collections in 2023 amounted to P3.824 trillion, up 7.86 percent from P3.545 trillion in 2022.

Finance Secretary Ralph Recto pledged to increase revenue collections this year as the Marcos administration targets expanded social services and create more jobs to continue the economic recovery.

“We think revenue collection will amount to around 16.3 percent of GDP by the end of 2028,” BMI said.

Despite a 5.6 percent growth in 2023, below Philippine standards, BMI’s prospects for 2024 appear promising with a projected GDP acceleration to 6.2 percent.

Private consumption resilience

“The resilience in private consumption is expected to further enhance revenue collection,” BMI wrote.

Government efforts to maintain spending within targeted limits are evident, with February data indicating spending levels in line with 2023 figures.

“We anticipate disbursements to represent 21.5 percent of GDP, marginally lower than the previous year,” BMI stated.

Looking forward, BMI projects an average expenditure of 20.2 percent of GDP until the end of Marcos administration in 2028. The administration remains committed to infrastructure spending between five to six percent of GDP to support growth objectives and attract foreign investment.