Wake Up, Philippines!

Budget deficit could swell to as high as P300 billion

Posted in Budget, dof by Erineus on March 25, 2009

By Iris C. Gonzales Updated March 25, 2009 12:00 AM

MANILA, Philippines – The country’s budget deficit could swell to a range of P257 billion to P300 billion this year if the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) fail to meet their revenue targets and if the government is unable to privatize state-owned assets this year, Socioeconomic Planning Secretary Ralph Recto said yesterday.

Recto said the figures are based on the latest assessment of the National Economic and Development Authority (NEDA) of the economy this year.

“The worst case scenario is that the deficit will hit P257 billion if BOC will not get enough revenues because imports are down but it could even hit P300 billion if BIR collections are also down,” Recto said.

NEDA is set to recommend this worst-case scenario to the interagency Development Budget and Coordination Committee (DBCC) for consideration, Recto said.

The P257 to P300 billion also considers the possibility that the government may not be able to privatize any state-owned asset this year because of poor economic conditions.

Recto, however, stressed that the DBCC has yet to consider NEDA’s latest assessment.

The Finance department has revised its budget deficit ceiling for 2009 to P177.2 billion from the previous assessment of P102 billion due to the impact of the global financial turmoil.

The government has reduced the target of the BIR for 2009 by P45.2 billion to P865.5 billion from the revised assessment of P910.8 billion. Under the proposed 2009 budget, the BIR is tasked to collect P965 billion this year. Last year, it missed its P845 billion revenue target after it only managed to collect P778.2 billion.

The government also slashed the revenue target of the BOC by P39.8 billion to P277.2 billion instead of P317 billion. It was originally tasked to collect P310 billion this year.