From P3.4B to P1.1B: Archival slashes Cebu City's deficit in first year

CEBU CITY, Philippines — Cebu City has reduced its budget deficit to P1.12 billion from the P3.43-billion shortfall recorded a year earlier.

Presenting his first State of the City Address (SOCA) on July 7, Mayor Nestor Archival said the city has steadily recovered from what his administration initially described as a fiscal crisis, although it continues to grapple with more than P1 billion in obligations that exceed available revenues.

The latest financial report, covering transactions as of June 30, 2026, showed total cash on hand across all city funds reached P10.28 billion, while total obligations stood at P11.40 billion, leaving a P1.12-billion deficit.

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The figures reflect a substantial turnaround from June 30, 2025, when the city posted a P3.43-billion deficit, with expenditures reaching P12.79 billion against available funds of P9.36 billion.

Deficit cut by over P2.3B

City records showed the deficit narrowed by approximately P2.31 billion over the past year.

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While available funds increased from P9.36 billion to P10.28 billion, total obligations declined from P12.79 billion to P11.40 billion, helping reduce the gap between revenues and expenditures.

Archival credited the improvement to a series of spending controls that sought to match government expenditures with actual collections.

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Among the biggest contributors to the savings were reductions in manpower costs, tighter controls on operating expenses, and efforts to curb electricity and fuel consumption.

A year of austerity

Within days of taking office on June 30, 2025, Archival imposed a hiring freeze through the city’s “No Appointment, No Work” policy, limiting personnel hiring to essential frontline services.

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The city also pursued energy conservation measures, including installing solar power systems in government facilities, limiting air-conditioning use, adopting a compressed four-day workweek, and shifting more government offices to energy-efficient operations.

Departments likewise cut travel expenses, conducted meetings and training online, rationalized fuel allocations, and adopted other operational efficiencies.

The administration also lowered the proposed 2026 city budget by about P4 billion compared with the previous proposal to align appropriations with more realistic revenue projections.

Restricted accounts

Despite the city’s P10.28 billion cash balance, much of the amount remains unavailable for general operations because it belongs to restricted accounts.

The city’s Local Development Fund accounted for P4.06 billion, while the Special Education Fund held P2.50 billion and Trust Funds totaled P2.13 billion.

These funds carry specific legal purposes and cannot freely finance regular operating expenses or settle unrelated obligations.

The General Fund—the city’s primary source for day-to-day government operations—contained P1.60 billion as of June 30.

Capital spending slows

The financial report also showed capital outlay obligations dropped significantly.

As of June 2025, capital projects with Certificates of Availability of Funds and Purchase Requests reached P2.86 billion.

A year later, that figure declined to just P101.78 million, reflecting the administration’s more conservative spending strategy while prioritizing fiscal recovery.

Meanwhile, accounts payable increased from P2.03 billion in March 2025 to P2.46 billion as of February 2026.

Fiscal recovery

Although the city has narrowed its financial gap, the latest report showed that Cebu City still spends more than its available resources.

The remaining P1.12-billion deficit suggests the administration’s fiscal consolidation efforts remain a work in progress even as Archival reported measurable gains during his first year in office.

The mayor has previously said his administration will continue implementing spending controls, expand energy-efficiency programs, and improve revenue collection as it works toward restoring the city’s long-term fiscal stability.

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