The Department of Finance (DoF) has noted underhanded efforts to affect the current strong growth momentum as it doused rumors circulating online and in public discourse that the government plans to impose new taxes this year.

The claims have surfaced amid growing concerns about a potential global economic slowdown, exacerbated by geopolitical tensions, prolonged high interest rates, and unpredictable trade policies.

Finance Secretary Ralph Recto addressed these concerns, emphasizing the government’s robust fiscal position and ability to fund critical projects without additional taxation.

Recto’s statements came at a pivotal time, as the nation navigates both domestic and international economic challenges, including the upcoming midterm elections and the proliferation of fake news online.

Q1’s strong fiscal performance

Recto explained that the government’s financial resources remain more than adequate to meet its obligations and support key programs to sustain economic growth.

He pointed to a significant increase in tax revenues during the first quarter as evidence of the country’s fiscal health.

According to the DoF, total tax collections from January to March reached P931.5 billion, a 13.6 percent increase from the same period in 2024.

The growth reflects the effectiveness of recent reforms and digitalization efforts in tax administration, which have streamlined processes and improved compliance.

Breaking down the figures, the Bureau of Internal Revenue (BIR) contributed P690.4 billion to the total, a remarkable 17 percent increase from the previous year.

This surge in collection can be attributed to enhanced tax collections, including the adoption of digital platforms that make it easier for taxpayers to comply with their obligations.

Meanwhile, the Bureau of Customs (BoC) collected P231.4 billion, up by 5.7 percent year-on-year, driven by improved import monitoring and stricter enforcement against smuggling.

These figures demonstrate the government’s ability to bolster revenue streams without imposing new burdens on Filipinos.

“At this point, current revenues are more than sufficient to support our expenditure requirements,” Recto said.

“We are meeting our obligations, funding key programs, and growing the economy without having to impose new taxes on our kababayans.”

His remarks were intended to reassure the public that the government is committed to fiscal prudence while maintaining its ambitious development agenda.

Measures for fiscal sustainability

Recto highlighted several strategic measures to ensure fiscal sustainability amid rising global economic uncertainties. These uncertainties stem from factors, including ongoing geopolitical tensions, such as conflicts in the Middle East and Eastern Europe, which have disrupted global supply chains and energy markets.

Additionally, high interest rates in major economies like the United States and the European Union have increased borrowing costs for developing nations, including the Philippines. Unpredictable trade policies, particularly the reintroduction of tariffs under the administration of US President Donald Trump, have further complicated the global economic outlook.

The Philippine government has implemented reforms to mitigate these challenges to strengthen its fiscal framework. One key initiative is digitalizing and rationalizing tax processes, which has significantly improved revenue collection efficiency. By leveraging technology, the BIR and BoC have reduced leakages, minimized corruption, and enhanced transparency in tax administration.

These efforts have boosted revenues and instilled greater public confidence in the government’s ability to manage its finances responsibly.

Moreover, the government has pursued legislative reforms to attract foreign investment and stimulate economic growth. Recto cited the Foreign Investment Act, the Retail Trade Liberalization Act, and the Public Service Act as critical pieces of legislation expected to drive further revenue growth in the coming years.

The Public Service Act, in particular, has been a game-changer, allowing full foreign ownership in strategic sectors such as railways, airports, expressways, and telecommunications. The government aims to modernize infrastructure, create jobs, and boost economic activity by opening these industries to international investors.

The revised Public-Private Partnership (PPP) Code is another cornerstone of the government’s fiscal strategy.

The PPP Code encourages private sector participation in infrastructure projects, enabling the government to stretch its budget further while sharing risks and rewards with private firms.

Under this framework, private companies finance and manage significant projects, such as toll roads, airports and energy facilities, in exchange for a share of the profits. This approach has allowed the government to undertake ambitious development initiatives without overextending its financial resources.

“We are also decisively managing our deficit level, while maintaining a sustainable debt trajectory aligned with our Medium-Term Fiscal Framework,” Recto said. The Medium-Term Fiscal Framework outlines the government’s plan to balance economic growth with fiscal discipline over the next several years. By prioritizing high-impact projects and optimizing revenue collection, the government aims to reduce its reliance on borrowing while ensuring that public services and infrastructure development remain adequately funded.

Debt management on track

The Bureau of the Treasury (BTr) provided additional context on the government’s fiscal performance, noting that it remains on track to achieve gradual reductions in the fiscal deficit over the next three years. Despite a 34 percent increase in the budgetary deficit from January to February 2025, which reached P103.1 billion, the BTr emphasized that this figure is within the government’s projections and does not signal fiscal distress. The temporary uptick in the deficit is primarily due to increased spending on infrastructure and social programs, which are expected to yield long-term economic benefits.

The Development Budget Coordination Committee (DBCC) has set a target of reducing the fiscal deficit to 3.7 percent of gross domestic product (GDP) by 2028, down from 5.7 percent in 2025.

This gradual reduction reflects the government’s commitment to fiscal consolidation while maintaining investments in critical areas such as education, healthcare and infrastructure.

By balancing spending and revenue generation, the government aims to ensure long-term fiscal sustainability without compromising economic growth.

The government’s debt management strategy has also been a focal point of its fiscal policy. By maintaining a sustainable debt trajectory, the Philippines has managed to keep its borrowing costs manageable, despite rising global interest rates.

The BTr has employed a mix of domestic and foreign borrowing to finance the deficit, focusing on securing concessional loans with favorable terms. Additionally, the government has prioritized issuing peso-denominated bonds to reduce exposure to foreign exchange risks, further strengthening its financial position.