Public sector seen to incur P74.3-B deficit this year

The government expects the country’s consolidated public sector position to incur a deficit of P74.3 billion for 2009, a marked turnaround from its previous projection of a P25.4-billion surplus for this year.

The latest public sector assessment takes into account the National Government’s revised budget deficit projection for 2009 of P102 billion, latest data from the Finance department showed.

The revised deficit ceiling is higher than the previous deficit projection of P60 billion for 2009.

The country’s consolidated public sector fiscal position is the combined budget deficits or surpluses of the National Government and state-owned firms. These include government-owned and controlled corporations, local government units and government financial institutions. It is closely monitored by local and foreign debt watchers as it is an indication of a country’s credit risk.

The P74.3-billion public sector deficit is -0.9 percent of gross domestic product (GDP) while the P25.4 billion surplus is 0.3 percent of GDP.

Financial institutions such as the Social Security System, Government Service Insurance System and the Philippine Health Insurance Corp. are expected to register a surplus of P50.09 billion while the Bangko Sentral ng Pilipinas (BSP) is projected to hit a surplus of P1 billion this year.

For 2008, the government expects the consolidated public sector financial position to hit a deficit of P19.9 billion, an improvement from the original projection of a P28 billion public sector deficit for last year.

The government has been trying to impose prudent spending and financial discipline on state-owned agencies to improve the country’s fiscal position.

In 2007, the government had a public sector surplus of P26.158 billion, sustaining the surplus in 2006 of P5.33 billion. The 2006 surplus was the first since the 1997 Asian financial crisis, swinging from a deficit of P103.54 billion in 2005.

Prior to the crisis, the public sector recorded a surplus of P7.5 billion in 1996.–Iris C. Gonzales, Philippine Star