The government’s revenue collections will be impacted by the downward revision of the gross domestic product (GDP) but should be offset by improvement in their tax administration, according to National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan.

During a Malacañang press briefing on Thursday, April 4, Balisacan said that revenues from the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) are still expected to rise despite a lower GDP forecast.

“The lower GDP growth will obviously affect the BIR and BOC collections. But on the other hand, as I was saying earlier, improving the tax administration will be the bigger source of that increase in revenues,” Balisacan told reporters.

“The program as proposed and approved by our cabinet, by the president, still shows quite a robust growth of tax revenues, particularly those coming from BIR and the Bureau of Customs,” he added.

Balisacan added that improvement in tax collection include the e-commerce activities, which he noted are “not captured by the tax system.”

“With the digitalization, when we can digitalize all these transactions and link them with our tax systems then we should be able to improve the tax administration,” he said.

The Development Budget Coordination Committee (DBCC) has revised the country’s economic growth forecast to 6.0 percent to 7.0 percent target band from the previous projection of 6.5 percent to 7.5 percent.

The DBCC also narrowed the GDP target to 6.5 percent to 7.5 percent from the previous 6.5 to 8 percent.

Meanwhile, the growth projection for 2026 to 2028 of 6.5 percent to 8.0 percent was kept.

The deficit to GDP, which is the difference between national government revenues and expenditures, is expected to drop from 5.6 percent this year to 3.7 percent by 2028.

The DBCC also projected that the debt-to-GDP ratio would fall from 60.2 percent in 2023 before settling at 55.9 percent in 2028, noting it is “well within the internationally accepted threshold of 70 percent, as recommended by the IMF.”

Despite lower economic development metrics, Rizal Commercial Banking Corporation Chief Economist Michael L. Ricafort said that the country remains to be one of the fastest growing economies in Asia due to favorable demographics.

High interest rates

One of the factors that prompted the Marcos administration’s economic team to lower the growth targets.

“It’s partly due to that that we still feel the high policy rates last year impacting on the economy this year,” the NEDA chief said.

The central bank has maintained the key policy rate at 6.5 percent earlier since an off-cycle hike in October 2023 due to rising inflation.

Analysts and economists see an uptick in the March inflation data amid food price increases and climate events such as El Niño.

Balisacan said that the government is improving the logistics and distribution systems for investing and bringing in the private sector to address the inefficiency in the market system.

"We are also monitoring closely the developments of the global food markets because, for example for rice, a lot of that inflation in rice is coming
from the fact that the global food prices rice prices have continued to increase," he also noted.