MANILA - The Philippines' main tax agency missed its revenue target in May by P3 billion ($62 million), a government source said on Thursday, straining further already fragile government finances.

The Bureau of Internal Revenue (BIR), accounting for two-thirds of total state tax collections, had aimed to collect P77 billion in May. But initial data showed the agency raked in just P74 billion last month, the source told Reuters.

The government is set to announce its budget data for May on Tuesday.

"The decline in the corporate income tax rate to 30 percent from 35 percent, and income tax exemptions granted to minimum wage earners, largely caused the revenue shortfall in May," said the source who declined to be named because he was not authorized to speak to the media.

The Southeast Asian nation expects a record budget deficit of P250 billion this year, or 3.2 percent of GDP, as a sluggish economy dampens state revenues and the government raises its spending to boost economic activity.

It recorded a budget surplus of P7.9 billion in April, the smallest for that month since 2005, bringing the fiscal shortfall in the first four months of the year to P111.8 billion.

The BIR's revenue target has been cut by P52 billion this year, hoping to compensate lower collections with increased debt. It raised its planned borrowings by almost the same amount of P52 billion to fund a wider 2009 budget deficit.

Under the previous budget deficit goal of P199.2 billion, or 2.5 percent of GDP, the government assumed a budget shortfall of 45 billion pesos in the second quarter, 34.7 billion pesos in the third quarter and P9.4 billion in the fourth quarter.

It has yet to announce its quarterly budget deficit assumptions under its new 2009 fiscal shortfall goal.