Government narrows February deficit to PHP 171.2 billion

The national government trimmed its budget deficit to PHP 171.2 billion in February 2026, slightly lower than the PHP 171.4 billion posted a year earlier, after a sharp jump in revenues helped offset faster spending growth, according to the Bureau of the Treasury’s latest cash operations report.

The Bureau of the Treasury said revenues in February climbed 43.52 percent, or PHP 109.6 billion, to PHP 361.3 billion from PHP 251.8 billion in the same month last year, while expenditures rose 25.83 percent, or PHP 109.3 billion, to PHP 532.5 billion from PHP 423.2 billion.

That left the year-to-date fiscal gap at just PHP 5.8 billion as of end-February, a steep 94.35 percent, or PHP 97.3 billion, drop from the PHP 103.1 billion deficit recorded in the first two months of 2025.

The February result followed a strong January, when the government had posted a budget surplus of PHP 165.4 billion, helping keep the two-month deficit close to balance despite the return to red ink in February.

For the first two months of 2026, government collections reached PHP 830.2 billion, up 15.48 percent, or PHP 111.3 billion, from PHP 718.9 billion in the same period last year.

Of that total, taxes accounted for 83.43 percent, or PHP 692.6 billion, which was 3.09 percent, or PHP 20.7 billion, higher than the PHP 671.9 billion collected a year earlier.

Non-tax revenues made up the remaining 16.57 percent and surged to PHP 137.6 billion from PHP 47.0 billion in January and February 2025.

The Bureau of Internal Revenue collected PHP 173.2 billion in February, up 8.51 percent, or PHP 13.6 billion, from PHP 159.7 billion a year ago.

The BIR’s gross February collection was even higher at PHP 175.4 billion, inclusive of a PHP 2.2 billion tax refund, the Treasury noted in its report.

For January to February, BIR collections reached PHP 531.9 billion, up 3.33 percent, or PHP 17.2 billion, from PHP 514.7 billion in the comparable period last year.

The agency’s year-to-date gross collection stood at PHP 534.1 billion, also inclusive of the PHP 2.2 billion tax refund.

The Bureau of Customs, meanwhile, collected PHP 73.7 billion in February, beating last year’s PHP 71.8 billion by 2.68 percent, or PHP 1.9 billion.

The Treasury said the customs gain reflected stronger enforcement and compliance measures, as well as the peso’s year-on-year depreciation, with the exchange rate moving from PHP 58.1 to the dollar in February 2025 to PHP 58.3 in February 2026, which raised the peso cost of imported goods and, in turn, collections.

For the first two months, BOC collections hit PHP 154.6 billion, up 2.39 percent, or PHP 3.6 billion, from PHP 151.0 billion in the same stretch last year.

Tax revenues in February totaled PHP 249.8 billion, up 6.59 percent from PHP 234.3 billion last year, while collections from other offices were flat at PHP 2.9 billion and still lower by 1.98 percent year on year.

The big swing came from non-tax revenues, which jumped to PHP 111.5 billion in February from PHP 17.4 billion a year ago, a 540.23 percent increase.

Within that segment, Bureau of the Treasury income soared to PHP 95.4 billion from PHP 7.9 billion, equivalent to growth of 1,104.24 percent, while non-tax collections from other offices rose to PHP 16.2 billion from PHP 9.5 billion, up 70 percent.

The Treasury attributed the spike largely to the earlier-than-usual remittance in February of dividends earned in 2025.

For January to February, BTr income reached PHP 109.1 billion, up 360.85 percent from PHP 23.7 billion, while other offices contributed PHP 28.5 billion, up 22.02 percent from PHP 23.4 billion.

The report also said grants included under other offices amounted to PHP 32.0 million in February 2026, compared with PHP 66.0 million in February 2025, and the same amounts applied to the year-to-date comparison.

On the spending side, the government disbursed PHP 532.5 billion in February, which the Treasury said was largely due to the spillover of the January National Tax Allotment and the Bangsamoro Autonomous Region in Muslim Mindanao block grant release into early February, as well as releases for the special shares of local government units from tobacco excise taxes.

Even with the February jump, cumulative expenditures for the first two months rose by only 1.70 percent, or PHP 14.0 billion, to PHP 836.0 billion from PHP 822.0 billion in the same period last year.

Of February spending, 90.81 percent, or PHP 483.6 billion, went to primary expenditures, up 29.04 percent, or PHP 108.8 billion, from PHP 374.8 billion a year earlier.

For the two-month period, however, primary expenditures slipped 1.47 percent, or PHP 9.9 billion, to PHP 659.3 billion from PHP 669.1 billion.

Interest payments in February were broadly steady at PHP 48.9 billion from PHP 48.4 billion last year, but the January-to-February total climbed 15.61 percent, or PHP 23.9 billion, to PHP 176.7 billion from PHP 152.9 billion.

The primary deficit for February narrowed by 0.59 percent, or PHP 728 million, to PHP 122.3 billion from PHP 123.0 billion in the same month last year.

By end-February, the government posted a primary surplus of PHP 170.9 billion, much larger than the PHP 49.8 billion recorded in the same two-month period of 2025.

Finance Secretary Frederick D. Go said the latest fiscal results gave the government more room to respond to risks now facing the economy.

“Our strong fiscal performance in February sets us up for a stable first quarter of this year. This acts as our safety net, giving us the resources to support the economy, especially during this time of uncertainty.”

“With tax and non-tax revenues growing and expenditures kept targeted, we have successfully reduced our fiscal deficit.”

“This fiscal buffer allows us space to provide timely, targeted, and managed subsidies to help those most affected in our country by the Middle East event. This performance by the Department of Finance (DOF) and its attached agencies allows the government to maintain fiscal discipline and ensure a sustainable path in managing the current crisis.”

The reference to the “Middle East event” comes as Philippine economic managers have been warning about the fallout from the conflict involving the United States, Israel, and Iran, particularly its potential impact on oil prices, inflation, and the broader economy.

The Department of Finance earlier said the Philippines had an oil buffer equivalent to about 50 to 60 days of national demand and was monitoring crude prices and foreign exchange movements as key triggers for possible intervention.

That concern has grown more urgent as the regional conflict has pushed oil prices higher and put added pressure on Asian currencies, including the peso, raising the risk of costlier imports for energy-dependent economies such as the Philippines.

For now, the February cash operations report suggests the government entered the second quarter with a much stronger revenue position and a far narrower fiscal gap than it had a year ago.