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Fitch Solutions has revised downwards its budget gap forecasts for the Philippines for this and next year, citing the likely continuation of fiscal consolidation and improvement in government revenues, according to a report by Philippine News Agency.

In a report dated June 21 and released on Wednesday, the unit of Fitch Group now sees the government’s budget deficit to account for 7.5 percent of gross domestic product (GDP) for 2022 and 6.2 percent for 2023. 

Its previous forecast was 8.1 percent of GDP for this year and 6.7 percent of domestic output for 2023. 


In 2021, the government’s budget gap accounted for 8.6 percent of GDP after amounting to PHP1.67 trillion. 

The report said its 2022 budget deficit as a share of GDP projection is lower than the government’s 7.6 percent assumption “due to slower economic growth assumption” while the forecast for next year is higher than the 6.1 percent approved by economic managers “as we expect expenditure to exceed the official target.” 

“Nevertheless, we still believe that the Philippines is still on track for a gradual fiscal consolidation over the coming years as strong revenue growth, alongside a recovering economy and positive tax reforms, will likely offset expansionary fiscal spending,” it said.

Based on the National Budget Memorandum issued by the Department of Budget and Management (DBM) last June 8, revenues are expected to reach PHP3.304 trillion this year, higher than the PHP3.005 trillion last year, and accounts for 15.2 percent of GDP. 

For 2023, revenues are projected to rise further to PHP3.632 trillion and PHP4.062 trillion in 2024 and PHP4.548 trillion in 2025.

Disbursements, in turn, are expected to amount to PHP4.954 trillion for 2022, PHP5.085 trillion for 2023, PHP5.392 trillion for 2024, and PHP5.723 trillion for 2025. 

These are then expected to result in a budget gap of PHP1.65 trillion for this year, PHP1.453 trillion for 2023, PHP1.329 trillion for 2024, and PHP1.174 trillion for 2025.

In terms of share of GDP, the 2024 budget gap is around 5.1 percent of GDP and in 2023, 4.1 percent of domestic output.

The report said the assumption for a continued drop in the government’s budget deficit is in line with the incoming Marcos Jr. administration’s bid to lower the fiscal gap to around 3 percent of GDP by 2028.

“However, we acknowledge there is still a high degree of uncertainty with regards to the 2023 fiscal projections as Marcos may not stick to the current fiscal projections by the outgoing Duterte administration as he looks to fund his government’s initiative,” it said.    

Quoting news reports, Fitch Solutions cited incoming Budget Secretary Amenah Pangandaman saying that the incoming economic team will convene in the first week of July after Marcos’ inauguration, and then will resubmit the budget proposals that include priority programs of the incoming administration.

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