The national government’s budget deficit widened to P198.5 billion in May, up 36.7 percent from P145.2 billion a year earlier, as lower non-tax revenues offset robust tax collections, according to the Bureau of the Treasury (BTr).

In its latest Cash Operations Report, the BTr said the wider monthly deficit was largely due to the early remittance of dividends by government-owned and controlled corporations, reducing collections that are typically recorded in May. Despite this, the cumulative budget deficit for the first five months of 2026 narrowed slightly to P522.5 billion from P523.9 billion in the same period last year.

National government revenues declined 7.2 percent year-on-year to P401.7 billion in May as non-tax collections plunged 64.2 percent to P39.4 billion.

Resilient tax revenues

Tax revenues, however, remained resilient, rising 12.2 percent to P362.3 billion on the back of continued improvements in tax administration and compliance.

Total revenues for January to May reached P2.07 trillion, up 6.2 percent from a year earlier, with tax collections accounting for nearly 89 percent of the total.

The Bureau of Internal Revenue (BIR) collected P279.1 billion in May, up 15 percent from a year earlier, supported by the extension of the income tax filing deadline to 15 May and the rollout of several digital reforms, including the Taxpayer Portal for Large Taxpayers, the QR-enabled Certificate of Registration, the Ease of Closing Business initiative, and measures implementing the new mining royalty law.

BIR collections for the first five months of the year reached P1.42 trillion, up 4.9 percent year-on-year.

Meanwhile, the Bureau of Customs collected P80 billion in May, up 5.7 percent, driven by stronger valuation practices and revenue-enhancement measures despite lower import volumes and the temporary suspension of excise taxes on LPG and kerosene.

Collections from January to May rose 6.3 percent to P405.7 billion.

Higher interest payments

Government spending increased 3.8 percent to P600.2 billion in May, mainly due to higher interest payments, larger transfers to local governments and the Bangsamoro region, releases under the Local Government Support Fund, and payments for foreign-assisted rail and road infrastructure projects.

Total disbursements in the first five months climbed 4.8 percent to P2.60 trillion.

Interest payments alone rose 20.9 percent in May to P84.6 billion, reflecting the timing of debt servicing and foreign exchange movements.

Excluding interest payments, the government’s primary deficit widened to P113.9 billion in May. However, the year-to-date primary deficit narrowed significantly to P101.3 billion, down 39.2 percent from the same period in 2025, indicating stronger underlying fiscal performance despite the temporary decline in non-tax revenues.

Domestic borrowing program

The Treasury recently announced a record P1.12-trillion domestic borrowing program for the third quarter, consisting of P245 billion in Treasury bills and P875 billion in Treasury bonds.