Noynoy reduces deficit cap for 2012

President Benigno Aquino III has set a lower deficit cap for the current year, setting sight on a 2.6 percent limit for fiscal year 2012, lower than the target set for 2011.

“Last year’s preliminary performance posted better figures than our projected 3 percent deficit versus the gross domestic product (GDP). Now that we’re aiming for a 2.6 percent deficit target this year, we have strong reasons to believe that we can reduce the national deficit to two percent of the GDP by 2013,” Budget and Management Secretary Butch Abad said.

Initial reports indicate that the deficit in 2011, which was capped at P300 billion, will only be in the vicinity of P192 billion or 2 percent of the GDP, far below the deficit ceiling set for the previous fiscal year.

Meanwhile, the government has pegged the revenue target for 2012 at P1.5 trillion or 14.2 percent of GDP. In view of the administration earlier pronouncement on public spending, the year’s disbursement assumption was set at P1.8 trillion or 16.9 percent of GDP.

Abad noted that with respect to public consumption, economic growth in 2012 — marked by the administration at a 5 to 6 percent GDP increase — will be driven forward by accelerated disbursements for public infrastructure.

“We’ve made remarkable headway in our expenditure program for 2012. As early as the first week of January, the Department of Budget and Management has already released 71 percent or P150 billion of programmed infrastructure outlays. The early passage of the budget was key to this, complemented by agency efforts to complete bidding ‘short of award’ for this year’s projects by the end of 2011,” he said.

He added that economic growth for this year will also be influenced by the P85-billion Disbursement Acceleration Plan (DAP) implemented in the fourth quarter of 2011. The DAP accounted for a dramatic increase in government expenditures during that period, jacking up last year’s spending to P475.2 billion in the fourth quarter alone.

“The DAP’s multiplier effect on the economy will continue to exert itself in the first semester of the current fiscal year. About P66 billion are already supported by cash outlays, although this will certainly not have an impact on the deficit,” Abad said.

Moreover, the Aquino administration plans to further invigorate its Public-Private Partnership (PPP) program, particularly in the second leg of FY 2012. In support of this goal, the National Economic Development Authority reported that at least six PPP projects will already have been bid out by the end of the first semester of the year.

“Growth will also be energized by improving prospects in external demand for local goods and services, particularly from emerging economies. Among others, we’re looking at increasing demand from the semiconductor and electronics industries as major influences in the economy this year,” Abad said.

Abad added that there is much optimism in continuing growth propelled by OFW remittances, projected to spike by 6 to 7 percent annually. Moreover, the business process outsourcing (BPO) industry is expected to proceed on an upward trajectory this year, with a 20 percent growth forecast aided by the administration.

“Growth in the BPO sector will be underpinned by key partnerships between the government and the BPO sector, particularly in generating a larger pool of qualified manpower for the industry,” he noted.

Aside from optimizing economic growth and broadening its revenue goals in 2012, the government will intensify its focus on containing the inflation rate within the 3 to 5-percent target to further improve business confidence in the country.

“The Aquino administration is determined to push for public expenditure reforms and make the most of promising growth in promising sectors. The government is likewise keen on diversifying domestic and external trade, and we plan to take advantage of burgeoning opportunities in fast-growing economies across Southeast Asia and beyond,” he said. –Fernan J. Angeles, Daily Tribune