Budget deficit seen to fall below P325 billion

MANILA, Philippines – The Aquino administration would likely be able to cap this year’s budget gap at P325 billion, according to the latest Market Call, a joint capital market research report issued by First Metro Investment Corp., the investment arm of the Metrobank Group and the University of Asia and the Pacific.

The report noted that the full-year deficit will likely fall below the P325 billion ceiling with the government tightening the noose on expenditures.

It said that with economic stimulus no longer needed, the government no longer needs to spend that much and would instead have more room to contain the budget gap within the target of P325 billion.

“Notably, the October deficit was even lower than the P19.1 billion ceiling set by the government for the month. With further fiscal stimulus no longer needed as the economy is driving faster than expected, the deficit target should be easily attained,” the report also said.

According to the government’s latest fiscal report, the budget deficit for October amounted to P10.5 billion or 63.2 percent lower compared to the same month last year as tax revenues improved while the National Government cut down its spending.

“The 10-month cumulative deficit aggregated to P270.3 billion or a mere 1.6 percent higher than the same period last year. This leaves some P55 billion of deficit to be incurred in the last two months,” the said the Market Call.

It also said that this should be easy given the October figure.

On the revenue side, total revenue reached P98.5 billion which reflected a 15.1 percent growth compared to October 2009, the Market Call also said.

This transpired as tax revenues totaled P87.1 billion, which was 17.1 percent higher. Of the amount, the Bureau of Internal Revenue (BIR) collected 15.7 percent more in October 2010 versus year-ago levels.

The Bureau of Customs (BOC), the other revenue agency collected 21.7 percent more revenues in October.

Total expenditures slowed down from P123.6 billion in September to P109.0 billion in October.

On a year-on-year perspective, this was 4.5 percent lower, according to the Market Call report.

“Excluding interest payments, expenditures were down by five percent, as the National Government sliced the remaining fat in the present budget,” it said.

As such, FMIC and UA&P concluded in its report that with this slowing deficit trend, the P325 billion target deficit for 2010 would not be capped.–Iris C. Gonzales (The Philippine Star)