Lower spending trims H1 deficit to P17 billion

MANILA, Philippines – The country’s budget deficit in the first six months of the year was way below what was programmed as the government has yet to catch up with its spending targets.

Finance Secretary Cesar Purisima reported yesterday that the deficit amounted to P17.231 billion in January to June, better than a target of P152.128 billion for the period, and P179.5 billion less than the deficit posted in the same period last year.

Purisima said the better-than-expected deficit in June proves that the Aquino administration’s efforts in running after tax evaders and smugglers are paying off.

“Truly, our tack on plugging loopholes in our tax administration system instead of imposing new taxes to shore up state revenues is now bearing fruit and as we continue our hard work towards this, we are confident that government coffers will continue to be boosted,” Purisima said.

Total revenue collections reached P681.64 billion, slightly lower than the government’s goal of P686.419 billion, but 15 percent higher than last year’s collections of P592.104 billion. The two main tax agencies, Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC), which account for more than four-fifths of state revenue, missed their first-half collection goals.

The BIR generated P457.996 billion during the six-month period, below the program of P460 billion for January to June. Similarly, the BOC collected P128.557 billion, also below the program for the period of P142.340 billion.

Expenditures for the six-month period likewise fell below target. Purisima said the government only spent P698.871 billion, against a target of P838.547 billion, with the figure also 11.4 percent lower than last year’s spending of P788.833 billion.

Economists said the controlled deficit will allow the Philippines to sustain economic growth amid the weak outlook globally.

Officials have said the government was well on track to hit its aim of cutting the budget deficit to P300 billion or three percent of gross domestic product (GDP) this year, even as spending was expected to pick up in the coming months. Last year, the shortfall reached a record P314 billion, equivalent to 3.5 percent of GDP.

The government said it plans to cut the shortfall further to 2.6 percent by 2012, and to two percent by 2013, keeping it at that level until 2016, when President Benigno Aquino’s term ends. It aims to get an investment grade rating for its fiscal efforts. –Iris C. Gonzales (The Philippine Star)