RP INCURS BUDGET DEFICIT OF P9.4 B IN 2007, LOWEST SINCE 1998
MANILA, FEBRUARY 12, 2008 (STAR) By Iris C. Gonzales - The country recorded a budget deficit of P9.4 billion last year, the lowest in 10 years and a fraction of its original target, Finance Secretary Margarito Teves announced yesterday.
“The 2007 deficit was the lowest since 1998 and represented 0.1 percent of gross domestic product versus the target of 0.9 percent of GDP at a P63-billion deficit,” Teves said.
The country had been targeting a shortfall of P63 billion, or 0.9 percent of GDP, in 2007 but easily beat that after accelerating the sale of government equity stakes and keeping spending in check to make up for weak tax collections.
“One should take this number in context of the P90 billion in assets that they sold in 2007. If you take that out, and one should, because those are non-recurring items, you have a budget deficit of closer to P100 billion,” said Sin Beng Ong, an analyst with JP Morgan.
President Arroyo has vowed to balance the government books this year, for the first time since 1997, but that target looks increasingly difficult as the engines of last year’s outperformance — asset sales and moderate expenditure — start to sputter.
The government has earmarked only P30 billion in privatization revenues this year and plans to accelerate infrastructure spending to shield its economy from a slowdown in the US, its main trading partner.
The Bureau of Internal Revenue (BIR), the country’s main tax agency which provides two thirds of government revenue, missed its collection target last year by 7 percent. The Bureau of Customs missed its goal by eight percent.
The heads of both departments have already asked that their targets for this year be trimmed but the government has refused.
Even with the record privatization proceeds last year, the country’s expenditure was around P37 billion less than projected.
Overall in December, the Philippines had a deficit of P22 billion, far exceeding its shortfall goal of P7.8 billion.
The government has already started to sell off assets to meet this year’s fiscal target. Last month, its raised P8.9 billion from a 10 percent stake in Manila Electric Corp.
Credit rating agencies have already warned that the Philippines’ failure to introduce new fiscal measures and its reliance on one-off asset sales to boost its coffers would weigh against a ratings upgrade.
The government is still sticking to its balanced budget goal for 2008 despite worries of a United States recession and proposals to spend an extra P75 billion to pump-prime the economy.
“We don’t really know the effects of any slowdown in the US economy but we’re hoping the effects are minimal,” Teves said.
He expects the BIR and BOC to improve their tax collection efforts.
“We expect further improvements in their tax collection that we have seen gradually taking place in the second half of last year,” Teves said.
Chief News Editor: Sol Jose Vanzi
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