TEVES SAYS 2005 BUDGET DEFICIT WITHIN P180-B TARGET
MANILA, August 9, 2005 (STAR) By Donnabelle L. Gatdula - Finance Secretary Margarito Teves said yesterday the country’s budget deficit will be within the P180 billion estimate for this year as revenue-generating agencies intensify tax collection efforts through various administrative measures.
"The BIR and the Bureau of Customs hope to offset their shortfalls and get back on track by setting up various administrative measures such as those that will improve sin taxes and jewelry tax collection, among others," Teves said.
For his part, National Treasurer Omar Cruz said "Our outlook for the deficit is definitely much better than P180 billion. Although our outlook is much better, we never brought it down. We kept the target at P180 billion."
President Arroyo aims to narrow the budget deficit for a third year from a record P211 billion in 2002 to reduce borrowings. The government spends a third of its bud-get to pay interest on almost P4-trillion worth of debt, leaving less funds to spur growth.
Before the suspension of the expanded value-added tax (EVAT) law, then Finance Secretary Cesar Purisima said the government was cutting its budget deficit forecast to P160 billion. The EVAT law would have boosted revenue by as much as P31 billion this year and raised the rate to 12 percent from 10 percent next January.
For the first six months, the deficit totaled P67.5 billion, less than the government’s P98.5 billion estimate.
The government had budget surpluses for April and June, the first in more than four years.
"We are way ahead of our target,’’ Cruz said. "So there is a possibility that we will end up with a much lower deficit even without the expanded value-added-tax. But it would be much better if it is implemented."
Cruz also said the government will pursue its planned international roadshow for the $800 million to $850 million bond offering of the National Government. "We will push through by September our roadshow in Europe and the US," Cruz said.
Budget Secretary Romulo Neri said the deficit this year could be as little as P158 billion, even with the suspension of the EVAT law.
"We did not change that,’’ Neri said yesterday.
Cruz denied reports the Bureau of Internal Revenue missed its July revenue goal by as much as P9 billion. He said the bureau’s tax collections have risen as of Aug. 5 from the P37 billion reported earlier.
The tax agency, which accounts for about 70 percent of the government’s income, will release revenue figures for July in mid- August, Deputy Tax Commissioner Kim Henares said.
Neri: Investors upbeat on RP By Marvin Sy The Philippine Star 08/09/2005
Newly-appointed Budget Secretary Romulo Neri expressed optimism yesterday that investors are regaining their confidence in the country in spite of the political crisis being experienced by President Arroyo.
Speaking before reporters at the conclusion of a hearing by the Senate committee on economic affairs, Neri said investors are showing renewed optimism on the country.
He said speculative money went up in July, signifying an increase in confidence among foreign investors.
"When they come in they’re betting that things will improve. If they go out that means they’re betting that things will deteriorate. So, money coming in basically is a bet that things will improve," Neri said.
Since the current political crisis reached its apex on July 8 with the resignation of 10 Cabinet members and bureau chiefs and the withdrawal of support on the President by some members of Congress, investors had been very cautious in entering the country because of the perceived instability.
Credit rating agencies, which indicated that they would upgrade their outlook on the Philippines following the passage by Congress of the expanded value added tax law, have since reverted to their cautious stance because of the political problems hounding the country.
Opposition leaders and other critics of Mrs. Arroyo have been demanding for her resignation but the President has managed to stave off the demands and has recently shown a slight improvement in her net trust ratings based on surveys.
Neri, one of the few members of the President’s economic team who did not join the July 8 resignations said investors are starting to see a recovery from the crisis and have started bringing in their money into the country.
"Apparently they see that our institutions are weathering the problem.
Our institutions stand firm. The institution of the Presidency, Congress and including our military system and even the church seems to be in order or in place," Neri said.
However, he admitted that a better indicator would be long-term investments as opposed to speculative money which could go out of the country as fast as it came in.
Neri, who used to be Socio-economic planning secretary, also gave a positive outlook for the country in 2006, with growth expected to come from the mining, call center and agriculture industries.
Heavy expenditure in infrastructure projects is also expected to respond to the need for more efficient transportation and growth in the tourism sector.
The northrail and southrail projects are two of the big ticket projects identified by Neri while in the tourism industry, he noted that more hotels are expected to be built to respond to the rise in arrivals from China, Japan and South Korea.
One area of concern, Neri said, is oil because of the steady rise in its prices because of the heavy demands of the big economies such as the United States.
He pointed out the global demand for oil is around 80 million barrels a day while the supply is only 81 million barrels.
Neri said the Philippines is very vulnerable to an increase in world oil prices since it is heavily dependent on foreign fuel sources.
He noted that a one-dollar change in oil prices would translate to a $120 million increase in foreign exchange requirement for the country.
In order to prepare for the expected increase in price of oil next year, Neri said the pace of development of alternative and sustainable sources of fuel should be hastened in order to soften its impact on the country.
The country is now abundant in natural gas as a result of the Malampaya exploration activities but this alternative fuel has yet to be fully utilized.
Reported by: Sol Jose Vanzi
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