Fiscal Consolidation Seen to Take Longer Than Expected

Halfway into the Marcos administration, the government is faced with a fiscal consolidation that is taking much longer than expected amid lower revenues and increased spending, with the budget gap moving further away from pre-COVID levels.

- By LOUISE MAUREEN SIMEON

Based on the revised medium-term fiscal framework (MTFF) approved by the Cabinet-level Development Budget Coordination Committee (DBCC), the government's fiscal consolidation is hitting the brakes this year until 2028, as compared to earlier expectations.

This is largely due to lower revenue assumptions and increased disbursements that would impact the deficit as a percentage of gross domestic product (GDP).

"There will still be fiscal consolidation, and basically what we plan to do is we will have to spend more because of (global) uncertainties to ensure we meet our growth targets," Finance Assistant Secretary Karlo Adriano said.

"We had revised our MTFF because external factors were not yet taken into account. We already had wars in Ukraine and the Middle East. There are so many global uncertainties," he said.

The deficit-to-GDP is expected to ease to 5.5 percent this year from the 2024 level of 5.7 percent. However, this is still higher than the previous projection of 5.3 percent.