BUDGET  SECRETARY:  2007  DEFICIT  TO  FALL  TO  P110-B

MANILA, OCTOBER 30, 2006
(STAR) By Paolo Romero - The government is expected to achieve a lower-than-target deficit of P110 billion this year, Budget Secretary Rolando Andaya Jr. said yesterday.

Andaya told The STAR that this year’s deficit may be lower than the P125 billion target because of the increase in revenues and the forced tightening of spending that resulted from the failure of Congress to approve the P1.05 trillion national budget for this year.

With a "re-enacted" 2005 budget of P907 billion, the executive branch did not have a "legal cover" to make some necessary expenditures while trying to meet the P125 billion deficit target, Andaya said.

He said President Arroyo’s signing into law of the P46.4-billion supplemental budget on Oct. 17, enabled the government to spend a little more to pay for "non-postponable" expenses and spur growth in the last quarter.

"With the supplemental budget, we estimate the deficit to be at P98 billion to P100 billion but we are still looking for ways to spend more, particularly on automatically appropriated items," Andaya said in a telephone interview.

He maintained that if the government does not try to spend more as planned this year, it may be forced to do so next year - a move that may result in a higher-than-target budget gap. Next year’s deficit target is P65 billion.

"If we move some of our planned expenditures this year to next year, our fiscal space might be too small," he said. There are encouraging signs in Congress that the proposed 2007 budget of P1.05 trillion would be approved before the end of the year.

Surpluses and tight spending helped the government meet its deficit targets in the last two quarters. National Treasurer Omar Cruz last week admitted the deficit this year might be lower than projected but he did not elaborate.

Andaya said the increased last-minute spending would also keep the country on a steady growth path in the last quarter. "Government spending is also one of the major growth drivers so this would help."

He said the executive branch aims to spend at least P10 billion more than what is authorized in the supplemental budget through some automatic appropriations.

These may include, he said, the national government paying some P5 billion to P6 billion in "employers" contributions to the Government Service Insurance System.

The Department of Budget and Management, he said, is also authorized to "realign" some funds from agencies that underspent in the previous quarters to those which stuck to their spending programs or those that have the capacity to spend more, Andaya said.


Chief News Editor: Sol Jose Vanzi

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