ARROYO ADMIN MAINTAINS FISCAL TARGETS FOR 2004, 2005
MANILA, August 2 , 2004 (STAR) By Des Ferriols - The Arroyo administration has decided to maintain its fiscal targets for 2004 and 2005 but the Development Budget Coordination Committee (DBCC) said adjustments would have to be made in the medium-term fiscal plan.
Assuming that Congress will pass at least "some" of the tax measures this year, budget officials said they expect the budget deficit to fall from the projected 4.2 percent of gross domestic product (GDP) this year to 3.6 percent in 2005.
"If Congress does not pass the laws then it only means that we have less to spend and expenditures will be lowered," Boncodin told reporters over the weekend.
However, Boncodin said the administration was not planning any heroics. "All we want is to show that there is a positive scenario,"she said. "When you target you have to make a good target (but) we should be bullish with all these reforms (government tax reforms)."
Boncodin said it was possible to improve the fiscal outlook in 2005 if the government could maintain spending at 2004 levels.
However, proposed budget for 2005 is P901 billion, up from P826 billion this year.
By following the same spending prudence in 2005, Boncodin said the revenue-to-GDP ratio would improve from 14.2 percent in 2004 to 14.7 percent next year.
Boncodin said this higher revenue effort already factored in the expected yields from administrative measures being implemented by the government.
"Collections from new tax bills will be appropriated in a supplemental budget," Boncodin said, adding that these monies will not be assumed under the budget until they have been implemented.
On the whole, Boncodin said the DBCC has also decided to retain its original targets and assumptions, with GDP growth targets still at 4.9 percent to 5.8 percent for 2004 and 5.3 to 6.3 percent for 2005.
Despite indications of accelerating inflation rate, Boncodin said the DBCC was also staying with its original projection of four to five percent for both 2004 and 2005.
Over the medium term, however, Boncodin said adjustments have to be made to include and schedule the P100 billion package of revenues planned by the Arroyo administration.
"The plan will affirm the government’s commitment to achieve a balanced budget within six years, consistent with its deficit reduction strategy," said Boncodin.
Reported by: Sol Jose Vanzi
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