The National Government’s revenue collection demonstrated strong momentum in the first quarter of 2025, expanding by 6.90% to reach Php 998.2 billion. This healthy revenue stream supported government spending, which aligned with targets at Php 1.5 trillion, representing 23.89% of the full-year expenditure program and marking a significant 22.43% year-on-year (YoY) increase. Consequently, the deficit for the first three months of 2025 amounted to Php 478.8 billion, a 75.62% rise compared to the same period last year. Despite this increase, the deficit remains within the projected Php 1.5 trillion for the entire year.
Strong Revenue Performance Driven by Tax Agencies
The positive revenue performance in the first quarter was primarily fueled by the robust collections of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC). Combined tax collections surged to Php 931.5 billion, a notable 13.55% increase from the first quarter of 2024.
This sustained growth for the third consecutive month reflects the effectiveness of the revenue agencies’ ongoing enhancement measures. Key initiatives include an intensified campaign against fake receipts, a stronger crackdown on illicit trade, advancements in digitalization, and streamlined tax payment processes.
Specifically, the BIR recorded an impressive 16.67% growth in tax collections, reaching Php 690.4 billion. This surge was driven by higher collections across various tax categories, including personal income tax (PIT), corporate income tax (CIT), percentage taxes, value-added tax (VAT), excise taxes, and documentary stamp tax.
The BOC also contributed significantly, posting a 5.72% increase in collections, amounting to Php 231.4 billion. This growth was primarily due to higher VAT from non-oil imports and increased excise tax collections from both oil and non-oil imports.
Non-Tax Revenue Temporarily Lower Due to Timing
Non-tax revenues contributed Php 66.7 billion in the first quarter, a 41.21% decrease compared to the previous year. However, this decline is largely attributed to the timing of dividend remittances from Government-Owned and Controlled Corporations (GOCCs). In early Q1 2024, 18 GOCCs remitted Php 28.23 billion in dividends, whereas only 3 GOCCs remitted a significantly smaller Php 0.027 billion in early dividends for the current year. Non-tax revenues are anticipated to rebound in the coming months as the bulk of GOCC dividends are scheduled for remittance to the National Treasury starting in May 2025.
Expenditure Aligns with Full-Year Program
First-quarter expenditures reached Php 1.5 trillion, nearly a quarter of the Php 6.2 trillion full-year disbursement program for 2025. This represents an improvement over the 20.36% share of total expenditures recorded in the first quarter of 2024. This more balanced distribution of first-quarter spending in the current year translates to a substantial 22.43% (Php 270.6 billion) increase compared to the previous year’s outturn.
The strong spending performance was driven by increased disbursements from key government agencies. The Department of Public Works and Highways (DPWH) saw higher spending on its road infrastructure program and regular operating requirements. Similarly, the Department of Social Welfare and Development (DSWD) recorded higher disbursements for its various protective services programs.
Significant fiscal transfers to local government units also contributed to the increased spending. These transfers included their National Tax Allotment shares, the Annual Block Grant to the Bangsamoro Autonomous Region in Muslim Mindanao, and releases from the Local Government Support Fund (financial assistance). Furthermore, the scheduled transfer of Php 32.8 billion (inclusive of accrued interest) to the Coconut Farmers and Industry Trust Fund contributed to the larger expenditure outturn.
Increased Interest Payments Impact Primary Deficit
Primary expenditures (net of interest payments) for the first quarter of 2025 reached Php 1.2 trillion, marking a significant 21.96% (Php 222.6 billion) acceleration compared to the Php 1.0 trillion recorded in the same period last year.
Meanwhile, interest payments for the first quarter stood at Php 241.0 billion, a 24.88% increase from the Php 193.0 billion paid in the first quarter of 2024.
Fiscal Deficit Expected to Remain Within Target
The year-to-date primary deficit for the first quarter stood at Php 237.8 billion. With anticipated dividend remittances and other non-tax receipts expected in the subsequent quarters, and as expenditures continue to align with the full-year program in a more balanced manner, the 2025 fiscal deficit is projected to remain within the Php 1.5 trillion target.
