PHL fiscal support limited in face of tariff turmoil — BMI

THE National Government’s (NG) budget deficit is expect- ed to widen to 6% of economic output this year as escalating trade tensions weigh on fiscal consolidation, Fitch Solutions unit BMI said.

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“We maintain our Philippine fiscal deficit forecast at 6% in 2025 as a more challenging external environment will challenge fiscal consolidation efforts,” it said ina report.

“The economy will need fiscal support to offset global headwinds, but policymakers will have very limited room to maneuver given already high public debt levels.”

BMI’s forecast is higher than the 5.5% deficit ceiling set by the Development Budget Coordination Committee for this year.

“This signals a clear slowdown in fiscal consolidation efforts and reinforces our view that the government faces growing constraints in reducing its budget shortfall over the medium term,” BMI said.

In the first six months, the NG budget deficit widened 24.69% to P765.5 billion.

The budget gap remained relatively within target as it was 0.63% above the projected P760.7 billion for the first half.

The government is hoping to bring the deficit down to 4.3% of GDP by 2028.