DOF urges Congress to align 2026 budget with fiscal plan

Finance Secretary Ralph G. Recto has urged lawmakers to align deliberations on the 2026 national budget with the government’s refined Medium-Term Fiscal Program (MTFP), stressing that public funds must work “as hard as the taxpayers” who provide them.

“Let us operate within the parameters of the Medium-Term Fiscal Program that reduces our deficit and debt gradually, creates jobs, increases income, and decreases poverty,” Recto told members of the House Committee on Appropriations during the Development Budget Coordination Committee (DBCC) briefing on August 18.

First crafted in 2022 and recalibrated by Recto in 2024, the Medium-Term Fiscal Framework was designed to be realistic and adaptive to challenges, while supporting sustainable growth. It factors in pandemic recovery and global uncertainties, including the Russia-Ukraine war, conflicts in the Middle East, and ongoing trade wars.

Recto said the framework ensures “every peso collected or borrowed will be stretched to deliver the biggest bang per buck for the Filipino people.”

Revenue growth and fiscal discipline

The finance chief reported that revenue collections have grown by an average of 13.8% annually over the past three years, with tax collections rising by 11.5% yearly. This pushed the government’s revenue effort to 16.7% in 2024—the highest in 27 years.

From 2025 to 2028, tax revenues are projected to grow 10.2% annually, raising total revenues to nearly PHP 6 trillion by the end of President Ferdinand Marcos Jr.’s term. By 2030, revenues are expected to breach PHP 7 trillion.

Revenue growth is being boosted by new reforms, including the VAT on Digital Services and the Capital Markets Efficiency Promotion Act. Additional measures such as the Rationalization of the Mining Fiscal Regime Act and a proposed General Tax Amnesty are also in the pipeline.

The Department of Finance (DOF) is likewise maximizing non-tax revenues through higher dividend remittances from government-owned and -controlled corporations (GOCCs) and privatization of idle state assets.

Deficit narrowing, spending priorities set

Recto said the fiscal deficit, which spiked to 8.6% of GDP in 2021 during the pandemic, has dropped to 5.5% in 2025 and is projected to narrow to about 4% by 2028 and 3% by 2030.

He cautioned against wasteful spending, emphasizing that taxes must be spent wisely to encourage compliance.

“People are naturally resistant to taxes. But their tax obedience can be won if they will see how the taxes they paid are spent for the right things, at the right price, by the right agency, at the right time,” Recto said.

He identified education, health, agriculture, infrastructure, and digital connectivity as key priorities with the highest multiplier effects on jobs, income, and poverty reduction.

Debt remains sustainable

Despite inheriting PHP 12.8 trillion in pandemic-related debt, Recto said the administration has kept borrowings sustainable, with most debt being long-term, domestic, and at fixed rates.

The government continues to follow an 80:20 borrowing mix favoring local markets to reduce exposure to foreign exchange risks.

“Every peso we borrow is invested in productive projects that deliver real benefits to Filipinos,” Recto said. “We will make sure that the economy will continue to outgrow the country’s debt.”

By 2030, the Philippine economy is projected to reach PHP 42.6 trillion, while debt is expected to settle at PHP 24.7 trillion, equivalent to 58% of GDP.

 

Growth felt on the ground

Recto noted that the Marcos administration’s policies are already showing results. Inflation slowed to 0.9% in July 2025, while the economy has been growing at an average of 5.9% since 2022—nearly double the global pace.

Since 2022, about six million jobs have been created, pushing labor force participation to a record 52.4 million Filipinos. Unemployment and underemployment rates have continued to decline.

Poverty incidence dropped to 15.5% in 2023, lifting 2.5 million Filipinos out of poverty. The administration aims to reduce poverty to 9% by 2028, freeing another eight million people from deprivation.

“This is the be-all and end-all of all our efforts,” Recto said. “As this is the definitive indicator that our growth has translated into real improvements in the lives of Filipinos through more and better jobs, higher levels of education, and healthier lives.”