Budget deficit widens to P266 billion as of October

MANILA, Philippines – The Philippines exceeded its 2009 budget deficit goal in just 10 months due to weak revenues and higher spending on reconstruction following strong typhoons that damaged crops and infrastructure in Luzon.

Finance Secretary Margarito Teves said yesterday the budget deficit from January to October now stood at P266.1 billion, which is above the full year goal of P250 billion.

He said the full-year budget deficit would most likely come in at P280 billion. “That is the likely scenario,” Teves said.

Teves said the scenario included the government’s sale of sequestered shares of San Miguel Corp. within the year. Without the sale, the deficit was likely to hover around P300 billion, he said.

Despite this, Teves said the programmed deficit ceiling for the year stays at P250 billion although the government expects a “worst-case” deficit scenario of P300 billion if revenues do not improve and the privatization of state-owned assets does not push through as programmed.

The “likely scenario” is a deficit of P280 billion, which assumes that the government would be able to sell the sequestered stake in San Miguel Corp. (SMC).

The government is looking at selling the 24-percent sequestered bloc in SMC for P50 billion, its 40-percent stake in Philippine National Oil Co. for P12 billion and 108 hectares of the 120-hectare Food Terminals Inc. (FTI) property in Taguig for roughly P13 billion.

Revenues during the 10-month period reached P925.4 billion, a drop of 4.8 percent from the P972.6 billion generated a year ago while expenditures increased to P1.191 trillion, 15.1 percent more than the P1.034 trillion disbursed in the same period last year.

Teves said the economic slowdown has affected the performance of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC).

“But we will continue to work harder to be more effective in implementing our tax administration measures,” Teves said.

In October alone, the budget deficit hit P28.5 billion, up by 218.6 percent compared to the P9 billion deficit reported in the same month last year.

This developed as revenues in October dropped to P85.6 billion, 7.6 percent lower than the P92.6 billion posted in the same period last year.

Expenditures, on the other hand, increased by 12.3 percent to P114.1 billion from P101.6 billion disbursed in the same period last year.

With the country’s fiscal position worsening, Teves reiterated his appeal to lawmakers to pass measures that would increase taxes and boost revenues.

“We hope that Congress will still support us in our proposed revenue enhancement measures that would bring in sustainable sources of revenues for the government,” Teves said.

Government is asking Congress to pass measures that would raise taxes on alcohol and cigarettes, simplify the country’s net income taxation scheme and rationalize fiscal incentives. –Iris C. Gonzales (The Philippine Star)