BMI: PH Budget Deficit to Narrow in 2026

The Philippines' budget deficit is expected to narrow marginally next year despite higher revenue collections, as state spending continues to outpace income, according to BMI Country Risk & Industry Research.

- By KEISHA TA-ASAN

BMI projected the country's fiscal shortfall to reach 5.4 percent of gross domestic product (GDP) in 2026, slightly down from its 5.5 percent forecast for 2025.

The projection is wider than the government's 5.3 percent deficit target for next year.

The proposed P6.793-trillion national budget for 2026 is equivalent to about 22 percent of GDP and up by 7.4 percent from this year. If passed, the plan will lift state outlays by 9.6 percent to P6.9 trillion, with infrastructure, education and defense remaining top priorities.

According to BMI, the Philippines has consistently underestimated both revenues and expenditures, but the latter by a larger degree.

"We think it will overshoot its 2026 deficit target by 0.1 percentage point," it said.