Department of Finance (DoF) Secretary Ralph Recto on Tuesday said the government remains on track toward hitting its revenue target of P4.13 trillion for this year.

Recto said revenue collecting agencies already recorded a total of P2.15 trillion from January to June, marking a 15.6 percent growth from the P1.9 trillion recorded in the same period last year.

The Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC) contributed P1.84 trillion in tax collections, growing their revenues by 10 percent compared to the year-ago level.

Recto attributed the growth to rationalization of taxes and digitalization of fiscal processes to encourage due payment of taxes.

Non-tax revenues

Meanwhile, Government-owned-and-controlled corporations (GOCCs) collected P314.2 billion in non-tax revenues, up by 63.3 percent following DoF’s order to raise their dividend rate from 50 percent to 75 percent.

“This robust revenue performance placed us among Asia’s top revenue-to-GDP (gross domestic product) ratios at 17.1 percent for the first half of the year. And this is above our full-year target of 16.1 percent,” Recto said Tuesday during the 2025 National Budget Deliberations at the Senate.

Moving forward, the DoF expects revenues to grow on average by 10.3 percent over the medium term, resulting in a higher revenue — to GDP (gross domestic product) ratio of 17 percent in 2028 from the minimum target of 16.1 percent for this year.

Increased BIR, BoC collections

Recto expects the BIR and the BoC to increase tax collections by 11.8 percent each year to ensure sufficient funds for numerous government projects toward higher economic growth based on GDP, which is seen to increase by 8.7 percent by 2028.

“These projections took into account the additional revenues from the refined revenue reforms of the DoF, which we recalibrated to ensure that they do not place undue burdens on the taxpayers,” Recto said.

Due to revenue growth, the DoF said the fiscal deficit of P613.9 billion remained “very manageable” at 4.9 percent of GDP or below the full-year target of 5.6 percent.

By 2028, the government projects a lower fiscal deficit of 3.7 percent.

Upper-middle-income society

Expenditures grew by 14.6 percent to P2.76 trillion as the Marcos administration aims to make the country a predominantly upper-middle-income society through more infrastructure and better public services.

In terms of debt management, Recto said the DoF will continue to seek affordable, peso-denominated loans from domestic sources as it avoids higher adjustments of government payments due to foreign exchange movements.

He added that the DoF prefers long-term loans to minimize rollover risks. Currently, long-term debts account for 79.8 percent of the country’s total portfolio.