BMI forecasts lower Philippine budget deficit in 2024

According to Fitch Solutions' BMI Research, the Philippines is expected to witness a reduction in its budget deficit this year, with revenue collection likely surpassing targets.

In a report issued on Tuesday, BMI Research indicated that the Philippine budget deficit is projected to decrease to 5.5 percent of the gross domestic product (GDP) in 2024, down from 6.2 percent in 2023. This anticipated reduction would mark the third consecutive year of shrinking budget shortfalls, reflecting the government's commitment to fiscal consolidation.

Furthermore, BMI forecasts a decline in the country's debt-to-GDP ratio to 59.7 percent in 2024, from 61.1 percent in 2023, with a further decrease to 52 percent expected by 2028.

Economic Growth and Revenue Projections

The Philippine economy is expected to grow by 6.2 percent this year, according to BMI's projections. Revenue collection is anticipated to surpass targets in 2024, driven by efforts to broaden the tax base. Last year, revenue collection exceeded the government's original target, reaching PHP3.8 trillion, a 5.2 percent increase.

BMI predicts that this trend will continue, with revenue collection expected to reach PHP4.27 trillion in 2024 and rise to PHP6.078 trillion by 2028. This would amount to approximately 16.3 percent of GDP by the end of 2028.

Expenditure Forecast

On the expenditure front, BMI projects that spending will average 20.2 percent of GDP until the end of President Ferdinand R. Marcos Jr.'s term in 2028. The current administration aims to maintain infrastructure spending between 5-6.0 percent of GDP to support a growth target of 6.5-8.0 percent.

Enhancing the infrastructure framework is deemed crucial for the government's ambitious goal of positioning the Philippines as a leading destination for foreign investment, according to BMI's analysis.