Govt to stick to deficit spending

THE Aquino administration does not intend to end the year with a budget surplus as registering one would be bad for the country’s economy, according to the Department of Finance.

Finance Secretary Cesar Purisima told reporters that the government is doing a lot of catching up in terms of public spending after it underspent during the first four months of the year.

As a result of its under spending during the first four months of the year, the government posted a budget surplus of P61 million.

Purisima said the government is still aiming for a 7-percent to 8-perent growth in the country’s gross domestic product by yearend, adding that this remains the “aspirational target” whereas the 5 percent is the target for budgetary purposes.

“We will definitely catch up in terms of public spending. That is our desire and we have started doing that,” the finance chief said.

He said the initial improvement in public spending will be determined when fiscal authorities release the May data, which is due this week.
Purisima said the government could “easily” meet its budget deficit goal of P300 billion, or about 3.2 percent of GDP at end-December.

GDP is the amount of goods and services produced within the country, while the deficit-to-GDP ratio is a key measure of the sustainability of the government’s revenue shortfall.

“We are way ahead of the plan [as we booked P28 billion savings in interest expense], and thus we shall be well within the 3.2 percent of GDP in our deficit, which is based on the 5-percent economic growth target,” the official said.

“Attaining a surplus is not necessary, and probably not good for the country. We will implement our plan, which necessarily includes a deficit of 3.2 percent of the GDP,” he said.

The public-private partnership (PPP) scheme remains an important program for the Aquino administration as it would help the country drive up the economy despite apparent delays in its project implementation, the finance chief said.

“PPP is still an important program for us. Let’s give incoming DOTC Secretary Mar Roxas time to adjust and lay down his strategy,” Purisima said.

The losing running-mate of President Benigno Aquino 3rd, former senator Roxas was appointed the new chief of the Department of Transportation and Communications after Jose de Jesus resigned. Roxas’ assumption to the DOTC has caused delays in the bids for priority projects, including the first Light Rail Transit 1-Metro Rail Transit 3 Operations and Maintenance Project, the first under the PPP portfolio.

The finance chief however said the President does not want a repeat of the Ninoy Aquino International Airport 3 or of the Northrail, wherein controversies and irregularities still haunt the government.

Purisima insists there was no delay, adding that the government was merely scrutinizing every project to be bid out to ensure that there will be no controversy that would arise in the process.

“We’re still on track to bid out at least ten projects. In fact, the first one is on stream already and I was told that by next month they’ll probably be ready to announce the winner,” he said, referring to the LRT1-MRT3 O&M Project.

“Secondly, there was a shift from the focus on unsolicited to solicited,” Purisima said, referring to the Aquino administration’s decision not to pursue unsolicited projects begun in the previous government.
“The difference is, with solicited; it is the government that will have to do the feasibility studies. The government will not rest until we launch several of our PPP projects in infrastructure,” Purisima said.

The first five PPP projects that were launched in March include the P14-billion LRT1-MRT3 O&M Project, the P10.59-billion Ninoy Aquino International Airport Expressway Phase II, the P21-billion North Luzon Expressway-South Luzon Expressway Connector Project, and the P1.6-billion Daang Hari-SLEX Link Road Project. –KATRINA MENNEN A. VALDEZ REPORTER, Manila Times