Wake Up, Philippines!

RP may raise deficit ceiling to P178 billion

Posted in Department of Finance/DOF by Erineus on February 25, 2009

MANILA, Philippines – The government may raise its budget deficit ceiling for 2009 to P178 billion from P102 billion because of the need to spend more this year, Finance Secretary Margarito Teves said yesterday.

Teves said the revised ceiling, equivalent to 2.2 percent of gross domestic product (GDP) and 74.5 percent higher than an earlier revised target, “is manageable.”

Originally, the government had a deficit ceiling target of P40 billion for 2009.

“A deficit which is 2.2 percent of GDP is still manageable,” Teves said.

Socioeconomic Planning Secretary Ralph Recto has said that chances are high that the government will revise downward the higher end of its GDP growth target range of 3.7 percent to 4.7 for 2009 because of the difficult global economic tide.

Recto said the government needs to work on raising revenues and improving its revenue-to-GDP ratio. He also said that a budget deficit which is equivalent to two percent of GDP is still comfortable.

Government sources also said the DBCC has recommended a downward revision in the collection targets of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC).

Originally, the BIR is tasked to collect P968.3 billion this year from a goal of P845 billion last year. Earlier, BIR deputy commissioner Nelson Aspe said the agency likely collected only P785 billion in 2008.

The BOC, for its part, has a revenue goal of P317 billion for 2009 as against the P254.4-billion collection target for last year.

The yearend budget deficit target is also expected to swell to P161 billion or two percent of GDP from the already revised ceiling of P102 billion.

Exports are expected to contract by eight percent this year from a previous growth target of one percent to three percent.

The economy, as measured by GDP grew by 4.6 percent last year, from a 30-year high of 7.2 percent recorded in 2007 as the country struggles to grow amid a global financial crisis.

The 4.6 percent growth for 2008 is within the DBCC’s revised economic growth assumption of 4.1 percent to 4.8 percent for last year and slightly above the National Economic and Development Authority’s (NEDA) initial estimate of 4.2 percent to 4.5 percent.

By Iris C. Gonzales
Updated February 25, 2009 12:00 AM
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Govt borrowing more in ’09

Posted in Department of Finance/DOF, Social Issues/Concerns, Sovereign Debts by Erineus on February 24, 2009

The Philippines will increase foreign and local borrowings to finance a higher budget deficit this year, Finance officials said yesterday.

The Development Budget Coordination Committee now expects a higher budget deficit of P160 billion, or 2 percent of the gross domestic product, from a revised forecast of P102 billion, to prepare for the full impact of the global financial crisis this year.

Slowing economic growth is crimping tax collection and the government is spending more to counter faltering exports.

Finance Secretary Margarito Teves said government might favor increasing its local-currency bond sales to fund the bigger budget shortfall.

“We will determine how many percent of the additional deficit will be sourced locally, and how many percent will be sourced from foreign sources,” Teves said in an interview yesterday in Phuket, Thailand. “More could be sourced locally.”

The final deficit target will be subjected to a “last- minute” review before it is released on Feb. 25, Teves said. The shortfall will “definitely be more than 1.2 percent,” he said.

The Philippines already raised its projected borrowings this year by 16.5 percent to P509.9 billion from P437.1 billion after revising the budget deficit ceiling to P102 billion, or 1.2 percent of GDP, from an initial target of P40 billion, or 0.5 percent of GDP.

The government had planned to secure about 76 percent of the total borrowings from domestic sources through the issuance of treasury bills and bonds and 24 percent from foreign commercial sources and multilateral lending agencies.

National Treasurer Roberto Tan yesterday confirmed to reporters that the government would adjust its borrowing program amid a much higher budget deficit.

He said the Philippines would raise its official development assistance loans to $1.75 billion this year from the programmed $1.1 billion.

Tan said the government was now negotiating with Japan International Cooperation Agency for a program loan ranging from $250 million to $300 million to co-finance the social protection program of the World Bank.

He added that the Philippines also hoped to finally draw $350 million worth of ODA loans mainly from World Bank and Asian Development Bank this year.

“We expect more program loans this year. We are getting additional loans against the program,” Tan said.

He said the Philippines was also not ruling out the possibility of tapping the international bond market again this year after raising $1.5 billion from the sale of 10-year US-dollar denominated benchmark bonds early January.

By Lawrence Agcaoili