2004  DEFICIT  BETTER  THAN  TARGET;  PLDT  IMPLEMENTS DRASTIC CUTS

MANILA, January 5, 2005 (STAR) By Des Ferriols -  The country’s budget deficit reached P180.117 billion in 2004, better than the P198-billion target for the period and about P19 billion lower than the actual shorfall for 2003, the Department of Finance (DOF) reported yesterday.

At this level, last year’s deficit was equivalent to only 3.8 percent of gross domestic product (GDP), much lower than the P197.815 billion originally expected for the year which was equivalent to 4.2 percent of GDP. For December alone, the deficit stood at P19.957 billion. The 2004 deficit was also significantly better than the 2003 deficit which totaled P199.868 billion or 4.6 percent of total GDP for the year.

The over-performance of the national budget, however, was at the expense of government-funded development spending as the Arroyo administration forced its agencies to trim down spending by cutting back on projects. In 2004, the Arroyo administration cancelled a number of critical project loans for development undertakings in utilities, agriculture and rural development. Data disclosed that expenditures amounted to P878.653 billion, spent mostly on the salaries of government employees and personnel including public school teachers and enlisted men.

The better-than-expected national deficit for 2004 came just in the nick of time as credit rating agencies reviewed the country’s economic outlook for a possible credit ratings downgrade. As early as November, however, there were already indications of over-performance as the budget deficit ended P21 billion below target at P160.2 billion, about 81 percent of the total full-year target. The Department of Finance (DOF) said that as early as November, the Bureau of Customs had already reached its full-year target mainly due to the depreciation of the peso.

The DOF said that in November, tight expenditure controls and aggressive tax collection put the Arroyo administration about P21.7 billion ahead of the programmed deficit for the whole year. The deficit is the most-watched economic indicator as credit rating agencies and the country’s foreign creditors examine the government’s fiscal performance for any indication of looming crisis. For this year, the Arroyo administration said its deficit target would be lowered to about P179 billion, anticipating new revenues from its new tax and administrative measures intended to raise collections beginning this year.

However, the added burden from the National Power Corp. was expected to blow a wider gap in the national budget from the original P184.5 billion target deficit to P193.3 billion in 2005. The 2005 deficit was revised by the Development Budget Coordination Committee (DBCC) yesterday to reflect the impact of the decision made by the Arroyo administration to absorb an initial P200 billion of NPC’s debts.

PLDT implements drastic cut in call rates, installation charges By Mary Ann Ll. Reyes

In an aggressive bid to spur the growth of the landline business this year, telecommunications giant Philippine Long Distance Telephone Co. (PLDT) has drastically reduced its call rates and installation charges today. For starters, for a flat fee of P50 for Jan. 5 only, PLDT’s nearly two million landline subscribers can call each other as well as 19 million Smart mobile phone subscribers nationwide without the usual per-minute charges. PLDT earlier declared Jan. 5 as National Telebabad Day which is loosely translated into "All You Can Talk Day." From Jan. 5 to 9, PLDT is also waiving fees on landline installations and monthly landline fees for the first two months of subscription. It is also offering a 50- percent discount on DSL or digital subscriber line subscriptions for one year. During Christmas and New Year’s day, PLDT offered a similar call rate by allowing its landline subscribers to call each other nationwide for a flat fee of P20.

PLDT Retail Business Group head Butch Jimenez said PLDT plans to maximize its superior nationwide network as well as its commanding subscriber numbers to offer the best services at the most attractive rates. "We will continually launch unique voice plans for our subscribers on special occasions every month throughout the year. We hope to generate incremental revenues from these offers especially from subscribers who no longer use their NDD (national direct dial) facilities," explained Jimenez. Aside from the special voice package offered today, PLDT will give at least a 50-percent discount on the monthly service fee for its popular DSL service to those who sign up for the service today. The company will also offer special computer subsidies for small- and medium-scale enterprises for the DSL business packages. "These moves underscore our two-pronged strategy for the retail business group," said Jimenez. "We want to generate renewed interest in the landline and extend our market dominance in the broadband business."

PLDT ended 2004 with about 40,000 subscribers and it expects to break the 80,000 mark by the end of 2005. The company presently controls over 85 percent of the broadband Internet market. In terms of revenues, the company hopes to more than double its revenues and exceed the P2-billion level from broadband alone. "We want to start the year strong with a focus on extending our dominance in the landline and data business," Jimenez said. "The statement we are making is clear, ‘Iba pa rin ang may PLDT landline."

Stock analyst Philippine Equity Partners notes that this effort is meant to revive the fixed line business, both in terms of number of subscribers and usage (NDD and fixed line to mobile traffic). "Should PLDT be able to find renewed growth in the landline business, it should complement the stellar growth it has had out of its mobile phone business in recent years," it said.

PEP estimates PLDT’s net profit to reach P22.6 billion in 2004 and P27.66 billion this year and P30.5 billion in 2006.


Reported by: Sol Jose Vanzi

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