The Philippines is expected to incur a budget deficit of P132.1 billion or 1.5 percent of the country's gross domestic product (GDP) next year due to the global economic crisis, a Finance Department official said Monday.

The amount is slightly lower than the revised budget deficit ceiling of P177.2 billion or 2.2 percent of GDP expected this year.

This 2010 budget gap seals the end of the economic managers’ previous goal of achieving fiscal balance years after decades of being in the red.

Gil Beltran, finance undersecretary for domestic finance and management services, told members of the Congressional Oversight Committee on the Comprehensive Tax Reform Program, that although the 2010 budget deficit would be lower than 2009’s, the continuing shrinking of the rich countries’ economies will continue to impact developing ones, like the Philippines.

"The crisis will still be there in 2010. There won't be an immediate disappearance of the crisis, there will still be effects," the undersecretary said.

Beltran said inflation may soften further to 3.5 percent in 2010, lower than this year's projected 3.9 percent. However, he said the government has to spend more for infrastructure and social services next year to boost the slackening domestic economy and further reduce the impact of the economic slowdown.

Economic managers, according to Beltran, are expecting the GDP to expand between 4.9 percent and 5.8 percent next year, higher than the revised growth target this year, which is from 3.7 percent to 4.4 percent. The yield of the 91-day Treasury bill rate, on the other  hand, is seen to ease to 5 percent.

Meanwhile, Beltran said the country would be able to balance its budget either in 2011 or 2012, depending on the fiscal plan to be implemented by the next administration.

Instead of following the original schedule of 2010 under the Medium Term Philippine Development Plan, the Arroyo administration has implemented a series of fiscal reforms aimed at advancing the achievement of a balanced budget of 2008.

This was due to adverse external developments in 2008 such as high oil prices and the US financial meltdown, forcing the Arroyo government to abandon its commitment abd postpone fiscal consolidation back to the original 2010 schedule.

In 2008, the budget deficit swelled to P68.1 billion or 0.9 percent of GDP as the financial crisis in the US and Europe snowballed to a global economic emergency.

Analysts keep track of countries' ability to meet their fiscal targets as an indicator of the economic managers' effort to keep their house in order.