Gov’t Proposes P7.2-Trillion Nat’l Budget For 2027

The government is seeking a higher P7.2-trillion national budget for 2027, even as economic managers slash growth targets and revenues amid the impact of the US-Iran war, as well as the lingering effects of the flood control graft scandal.

Under the National Budget Memorandum, signed by acting Budget Secretary Kim Robert de Leon, the Department of Budget and Management (DBM) said the government is proposing a P7.2-trillion spending plan next year, up six percent from this year’s allocation of P6.793 trillion.

Next year’s budget is equivalent to 21.7 percent of the gross domestic product (GDP).

Officials said that in drafting the spending plan for 2027, the government faced a “very narrow fiscal space” further squeezed by automatic appropriations, including the National Tax Allotment, interest payments, newly enacted laws and recurrent mandatory expenditures.

“The issues surrounding alleged anomalies in flood control projects last year and, more recently, the conflict involving the United States, Israel and Iran made a drastic impact on the country’s macroeconomic fundamentals,” the DBM said.

The DBM said these further constrained the government’s ability to meet its “revenue targets, sustain economic growth, address key development gaps and consolidate gains from past structural reforms and poverty reduction efforts.”

With this, the economic managers recalibrated fiscal policy to stimulate economic activity and support vulnerable sectors amid the detrimental effects of the Middle East conflict, as well as the threats posed by El Niño and climate change.

The Development Budget Coordination Committee (DBCC) lowered its macroeconomic targets, cutting the 2026 GDP growth target to 3.5 to 4.5 percent from five to six percent previously.

For 2027 to 2030, growth was also reduced to five to six percent.

These new targets are slightly lower than the earlier 5.5 to 6.5 percent for 2027, and six to seven percent for 2028 to 2030.

The DBCC’s review of the macroeconomic assumptions came after the Philippine economy expanded by just 2.8 percent in the first quarter, the slowest pace in five years.

Higher deficit, spending

The DBCC said the current macroeconomic conditions and geopolitical developments have increasingly undermined the credibility and relevance of the growth targets and fiscal projects in the updated Medium-Term Fiscal Framework.

For 2026, the government aims to collect P4.81 trillion in revenues, down from its previous projection of P4.82 trillion.

Only the 2027 revenue target was raised to P5.21 trillion from the earlier estimate of P5.12 trillion.

Revenue targets for the following years were also cut to P5.52 trillion in 2028 from P5.57 trillion originally, P5.99 trillion in 2029 from P6.08 trillion and P6.52 trillion from P6.63 trillion in 2030.

At the same time, expenditure programs were revised upwards across the board to P6.47 trillion for 2026, P6.9 trillion for 2027, P7.25 trillion for 2028, P7.61 trillion for 2029 and P7.98 trillion for 2030.

Economic managers increased budget deficit ceilings in 2026 to 2030, “to reflect a more realistic fiscal stance, while remaining fully aligned with growth-enhancing fiscal consolidation.”

The 2026 budget deficit is now pegged at P1.66 trillion or 5.4 percent of GDP. For 2027, the deficit is also increased to nearly P1.7 trillion or equivalent to 5.1 percent of GDP.

The target was likewise increased to P1.72 trillion (4.8 percent of GDP) for 2028 and P1.62 trillion (4.2 percent of GDP) for 2029.

Lastly, the budget deficit is expected to pare down to P1.46 trillion (3.5 percent).

The DBCC also tweaked some macroeconomic assumptions on inflation, trade, crude oil and foreign exchange rate.

Inflation is now projected to average six to seven percent this year, four to five percent in 2027 and two to four percent in 2028 to 2030.

Meanwhile, the Philippine peso is expected to average at P60 to P62 against the US dollar in 2026 to 2030.

Track the budget online

Meanwhile, President Marcos on Friday, June 26, led the launch of DBM’s COMPASS (Centralized Open Monitoring Platform for Appropriations and Spending Statistics), a new digital platform that allows Filipinos to track where their hard-earned money goes.

Consolidating thousands of budget release records and trillions of pesos in government spending data into a single platform, COMPASS makes budget information more accessible and understandable to the public.

The website allows the public to track the flow of public funds, from appropriations authorized by law, to releases issued by DBM, commitments made by agencies and actual disbursements.

Marcos also launched the updated Philippine Public Financial Management Reform Roadmap 2024-2028. – With an additional report from Helen Flores