For the first 11 months of the year, the national government posted a P1.26-trillion budget deficit, up by P150 billion from October’s P1.11-trillion shortfall, the Bureau of the Treasury (BTr) reported.

In a Tuesday statement, the BTr said the deficit represents 80.92 percent of the Marcos administration’s P1.56-trillion full-year target, “reflecting the government’s commitment to prudent fiscal management and consolidation.”

Spending outpaced increase in revenues

Year-on-year, the deficit widened by 7.38 percent from P1.18 trillion in November 2024. The Treasury attributed the expansion mainly to higher government spending, which rose 2.49 percent, outpacing the 1.09 percent increase in revenue collections from taxes and other sources.

A national government budget deficit occurs when total expenditures exceed total revenues within a fiscal year. In practical terms, this means the government spends more than it collects from taxes, fees, and other income, requiring it to borrow funds or draw on reserves to cover the gap.

Deliberately used as a policy tool 

Budget deficits are often used deliberately as a policy tool, particularly during economic slowdowns, natural disasters, or crises, when governments ramp up spending to stimulate growth, provide social protection, or finance infrastructure projects even as revenues lag.

While deficits are not inherently negative — especially when borrowing supports productive investments — they can raise concerns about debt sustainability, inflationary pressures, and future tax burdens if they expand excessively or are financed inefficiently.

The BTr reported that the primary deficit for the 11-month period narrowed to P463.2 billion, down 1.77 percent, or P8.4 billion, from P471.5 billion in the same period last year. The Bureau partly attributed the improvement to “temporary delays in the implementation of some flood control projects amid ongoing investigations related to alleged corruption issues.”

The “Floodgate” scandal weighed heavily on economic performance in the third quarter, with gross domestic product growth, foreign direct investment, and foreign exchange metrics all deteriorating following revelations of ghost flood control projects.

Government spending under increasing examination

Amid heightened public scrutiny, national government spending has come under increasing examination. 

The Bicameral Conference Committee recently approved the P6.7-trillion 2026 national budget, even as concerns persist over budget insertions, unprogrammed appropriations, and confidential funds — mechanisms that, while not unusual in fiscal policy, have figured prominently in corruption allegations linked to the infrastructure scandal.