, April 17, 2004
By Des Ferriols - The government kept its budget deficit within target for the first three months of the year, the Department of Finance (DOF) reported yesterday.

Based on DOF data, the deficit fell 18.4 percent to P22.28 billion in March, leaving the three-month shortfall at P56.847 billion versus the target of P58.9 billion.

"Because of the below-target deficit we achieved in the first quarter we expect the second quarter to be better, especially as April is a tax month, " Finance Secretary Juanita Amatong said.

"If we sustain the improvement in the peso-dollar rate, our debt servicing will go down and help us save expenditure," she added.

The finance department said first quarter revenues came in at P152.61 billion, up from P136.569 billion a year ago.

The actual collection for the quarter in review was also P1.344 billion better than the P151.266-billion target.

Amatong said the increase came from the Bureau of Customs which collected P29.195 billion during the period, or P4.3 billion more than the programmed level.

The Bureau of Internal Revenues (BIR), on the other hand, generated P2 billion less than expected, with its collections amounting to P98.974 billion compared to a P101.084 billion target.

Expenditures, on the other hand, rose to P209.457 billion from P195.448 billion in the first quarter of 2003.

The government is aiming for a balanced budget by 2009, but economists said that goal already looks difficult without more ambitious annual cuts in the deficit target.

They have also expressed concerns that spending related to May 10 national elections in which President Arroyo is seeking a fresh term could push up spending.

During the three-month period, debt service expenses amounted to P66.815 billion, or P5.278 billion lower than the P72.093 billion target.

Foreign debt service was P408 million more than expected, amounting to P28.284 billion compared to the projected P27.776 billion.

The government aims to limit its budget deficit to P79.60 billion by the second quarter and P143.3 billion by end-September on its way to the full-year goal.

Ratings agency Standard and Poor’s has said that a deterioration in the deficit could be one trigger for it to downgrade the country’s sovereign debt rating, which is already two notches below investment grade.

Reported by: Sol Jose Vanzi

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