Palace downplays IMF concerns over deficit

MANILA, Philippines – Malacañang downplayed yesterday the reported concerns raised by the International Monetary Fund on the country’s budget deficit, which has already breached the government’s full-year target as of October.

Deputy presidential adviser on economic affairs Gary Olivar allayed the concerns of the IMF over the deficit, saying that the level remains manageable.

“The IMF need not be concerned about the Philippines’ commitment to fiscal stability which has been duly recognized through our successive credit rating upgrades,” Olivar said.

IMF officials have raised concerns about the widening deficit during a meeting with the country’s fiscal and monetary officials last week.

A government officials revealed that the IMF team sough an explanation from fiscal authorities on how they intend to proceed with the fiscal consolidation plan aimed at achieving a balanced budget by 2013.

“It looks like they (IMF) haven’t been able to see clearly what National Government will do with the deteriorating ratios, including how to lift tax collection and reduce the deficit,” the official said.

Olivar argued that the deficit to gross domestic product ratio remains manageable at under four percent.

This was attained despite fiscal pressure from the unexpected expenditure for the relief and rehabilitation of areas damaged by the typhoons and floods that ravaged the country in the past two months.

The government is also maintaining its economic stimulus program, which was implemented at the height of the global financial crisis.

“We are redoubling our tax collections, pushing for new revenue raising measures to Congress and continuing government asset sales,” Olivar said.

“Fiscal space remains ample and the gathering global recovery could further improve our economic and fiscal prospects,” he added. –Marvin Sy (The Philippine Star)