MANILA,  January 8, 2004 (STAR) The Bureau of Internal Revenue (BIR), which collects more than two-thirds of the cash-strapped government’s revenues, said yesterday initial figures showed it had beaten its 2003 target.

BIR Commissioner Guillermo Parayno, said the agency took in P424.27 billion last year, slightly more than the goal of P424.01 billion.

For December alone, tax collection of P35.68 billion beat the target of P34.55 billion.

The tax figures bolstered an initial government estimate on Tuesday that its closely watched budget deficit came in at P198.7 billion last year, lower than the target of P202 billion, despite last-minute spending in December.

The final 2003 deficit figure is expected to be released later this month.

The government reported a fiscal shortfall of P172.2 billion in the first 11 months of 2003, lower than the goal of P189.7 billion, easing investor concerns about the full-year figure after it blew through deficit targets three times in 2002.

The Philippines, Asia’s largest sovereign debt issuer outside Japan, aims to keep its 2004 budget deficit within P197.8 billion but some analysts have warned of a spending binge related to the country’s elections on May 10.

Counting the 2004 deficit, the country has run shortfalls in 10 of the past 14 years due to anaemic tax collection, evasion, corruption and rising costs to service foreign debt of more than $56 billion.

GIR level hits $16.815-B in 2003 By Des Ferriols The Philippine Star 01/08/2004

The country’s gross international reserves (GIR) as of end-2003 reached $16.815 billion, propelled above the $15-billion target by the government’s aggressive foreign borrowing in the last quarter of the year.

The Bangko Sentral ng Pilipinas (BSP) reported yesterday that the GIR increased slightly from $16.801 billion in November as a result of the NG’s borrowing.

BSP Governor Rafael Buenaventura said dollar inflows from investors and overseas Filipino workers also contributed to the increase.

"I’m pleased that we ended the year with the GIR at this level, despite the depreciation of the exchange rate," Buenaventura said.

According to Buenaventura, the end-December GIR is good for 4.7 months worth of imports and is enough cover for 1.5 times the country’s foreign obligations based on residual maturity.

However, Buenaventura expressed disappointment that the peso ended the year at 55.5 to the dollar, way above the BSP’s target of 54.5 to the dollar.

"But that was due to circumstances that were beyond anyone’s control," Buenaventura said. "The political noise was just too much for the market but we expect this to die down eventually."

Inflows from NG borrowing were enough to offset huge expenses in December, including some $300 million worth of maturing obligations that needed to be paid or re-financed.

The GIR has been getting ample support from government borrowings but import receipts have been lagging behind remittances from overseas Filipino workers in terms of growth.

The BSP said borrowings made it possible for the year-end balance of payments to close at a deficit below $1 billion.

Buenaventura said the unexpected strong performance of the Arroyo administration’s dollar-denominated global bonds allowed the GIR to increase in October and possibly to increase even more by yearend.

Ideally, the country’s GIR should be well supported by foreign exchange inflows from economic activities such as merchandise and non-merchandise exports as well as actual investments.

However, since investments have failed to materialize in the magnitude that government originally hoped, the GIR has had to pick up its growth momentum from the government’s foreign borrowing.

The 2004 GIR is projected to reach $16 billion as the BSP expects a marked increase in foreign direct investments and improvements in export earnings.

The BSP said the increase will allow monetary officials some flexibility in targeting inflation. The BSP said there is an expected increase in remittances from overseas Filipino workers, from zero growth this year to at least three percent in 2004.

According to the BSP, the government is anticipating an increase in the deployment of Filipino workers abroad especially to higher-paying positions in health and medical services.

According to the BSP, inflows from OFWs would boost the GIR in 2004 together with the anticipated increase in foreign direct investments which was projected to reach $900 million next year.

Reported by: Sol Jose Vanzi

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