The government can afford to widen its deficit to as much as P257 billion, or 3 percent, of the gross domestic product (GDP) this year for as long as it continues to show its resolve in tax collection, Budget Secretary Rolando Andaya Jr. said on Monday.

Andaya said in an interview at the Palace’s Rizal Hall that credit-rating agencies have informed the country’s economic managers they will not downgrade the Philippines’ credit ratings should the deficit expand to 3 percent of GDP, provided there is a strong tax effort.

Asked whether the country is far from a P257-billion deficit this year—the worst-case scenario earlier made by Socioeconomic Planning Secretary Ralph Recto—Andaya said: “That can be achieved.... The problem now is revenues, not spending. I’m on track in my spending.”

He said a deficit of 3 percent of GDP—slightly higher than the revised 2009 deficit target of 2.5 percent of GDP—is “still okay.”

“I think the stand of the DBCC [Development Budget Coordination Committee] is 2.5 [percent]  to 2.6 [percent deficit], but the rating agencies have told us that they’re willing for us to reach 3 percent and it would still be okay with them. It would not lead to a downgrading as long as the effort in taxes is evident,” he said.

The budget chief added that in the past, credit-rating agencies had two concerns, namely, “whether you would hold back on expenditures and revenues.”

“So we’ve already shown that expenditures are there. In fact, for the first quarter, infrastructure [spending] is up by 70 percent year-on-year. So on that side, we have already convinced them that we’re serious on that part. Revenues are the problem now,” he said.

In April, the government reset its 2009 deficit forecast to P199.2 billion, or 2.5 percent of GDP, from P177 billion, or 2.2 percent of GDP, due to increased fiscal spending and weak government revenues.

Recto earlier said the “realistic band” of this year’s budget deficit is P180 billion to P257 billion.

Recto had said the deficit will increase to P200 billion this year if government revenues are flat; to P230 billion if the privatization of big-ticket assets stalls; and to P257 billion if tax revenues from imported goods contract by 10 percent.