The Philippine government has proposed a P7.2-trillion national budget for 2027, representing a 6% increase from the current year's P6.793 trillion, despite a lowered economic growth target and reduced revenue expectations.
Fiscal Constraints and Budget Drivers
According to the Department of Budget and Management (DBM), the government's fiscal space is limited due to automatic expenditures such as the National Tax Allotment, debt payments, and other mandatory spending. The DBM noted that these fixed costs significantly constrain discretionary spending.
The budget preparation was also affected by alleged anomalies in flood control projects, as well as geopolitical tensions involving the United States, Israel, and Iran. Additionally, threats from El Niño and climate change have impacted the economy and the government's ability to meet revenue and growth targets.
Revised Economic Growth Targets
As a result of these challenges, the Development Budget Coordination Committee (DBCC) lowered the economic growth target for the current year to 3.5% to 4.5%, down from the previous 5% to 6%. This revision follows the economy's expansion of only 2.8% in the first quarter, the slowest in five years.
The proposed budget aims to balance fiscal sustainability with the need to fund priority programs amid a constrained fiscal environment.
