BMI, a Fitch Solutions company, said the Philippines’ budget deficit would likely shrink to 5.5 percent of the gross domestic product (GDP) in 2024 from 6.2 percent in 2023.
“We forecast the Philippine budget deficit to narrow from 6.2 percent of GDP in 2023 to 5.5 percent in 2024. This narrowing would mark the third consecutive year the budget shortfall shrinks, a reflection of the current administration’s push for fiscal consolidation,” BMI said.
“Our 2024 forecast is higher than official projections of 5.1 percent due to a disparity in growth assumptions,” it said.
BMI predicted that the economy would expand by 6.2 percent in 2024, within the government’s target range of 6 percent to 7 percent.
The Fitch unit said revenue collection would likely overshoot target in 2024 as efforts to broaden the tax base gain traction.
Revenue collection reached P3.82 trillion in 2023, 5.2 percent above the original target set by officials and 6.5 percent higher than the 2022 figure.
“We think that this trend will continue over the coming years as policies targeted to broaden the tax base feed through,” BMI said, adding that newly-appointed Finance Secretary Ralph Recto pledged to sustain these efforts.
“We think revenue collection will amount to around 16.3 percent of GDP by the end of 2028,” it said.
BMI also expects the government’s expenditure as a percentage of GDP to average 20.2 percent until the end of President Marcos’ term in 2028.
“The current administration has committed to keeping infrastructure spending between 5 percent to 6 percent of GDP to support a growth rate of 6.5-8 percent,” it said.
BMI also predicted a decline in the debt ratio to 52 percent of GDP by 2028.
“Government debt swelled to 61.1 percent of GDP in 2023, a significant rise from the pre- pandemic level of 39.6 percent. This trend echoes the global situation, where governments, in response to the economic crisis caused by the pandemic, boosted spending significantly while revenues plummeted,” it said.