(UPDATE 2) RP's budget deficit hits P11.4-B in May
abs-cbnNEWS.com | 06/23/2009 11:30 AM
Printer-friendly version | 
Send to friend | 
Share your views
MANILA - The country's budget swung to a P11.4-billion ($235 million) deficit in May from a surplus of P7.9 billion in April, Finance Secretary Margarito Teves said on Tuesday.
The latest figure brings the fiscal shortfall for the first five months of the year to P123.2 billion, 556.2 percent higher than P18.8 billion in the same period in 2008.
Although it was nearly half of the government's revised full-year ceiling of P250 billion, it was still well within the deficit target of P155.1 billion for the first six months.
Teves expressed confidence that the country's budget deficit will stay on track with official targets. He did the same thing last month when he said the government would stick to its earlier budget gap ceiling of P199.2-billion.
The government has been frontloading spending to overcome the slowdown in the economy, which it also blames for poor revenue collection. For the first three months of the year, the country's tax effort slowed to 11.5 percent of gross domestic product (GDP) from 12.9 percent in 2008.
The tax effort is the ratio of tax collections to GDP. The indicator mirrors the government's ability to raise revenues for infrastructure and social services.
Tax collections fell by 7.9 percent to P200.74 billion, P18.34 billion short of the government's target of P219.08 billion for the three-month period.
The country's GDP, on the other hand, barely expanded in the first quarter, slowing to 0.4 percent from 2.9 percent in the same period last year. The figure was much lower than the government's 1.8 to 2.8 percent projection, and was the lowest since the final quarter of 1998, during the Asian financial crisis.
Economic managers downscaled their growth forecast for 2009 between 0.8 and 1.8 percent from its previous growth range of 3.1 to 4.1 percent.
Mixed views
Given the country's P123.2-billion fiscal shortfall for the first five months of the year, economists had mixed views regarding the government's ability to meet its full-year deficit target.
Su Sian Lim of DBS, for instance, found the P250-billion budget gap ceiling "too optimistic," saying that the Philippines is likely to incur a fiscal shortfall of P340 billion for 2009.
"The government's estimate for the full year is too optimistic. I think the deficit could come to as much as P340 billion for this year based on our own GDP estimate. That (the deficit) will come up to 4.5 percent of GDP," Lim said.
Joey Cuyegkeng of the ING Bank in Manila, on the other hand, did not see the need to hike the country's deficit target.
"With this number, they have a lot of leeway for June. What will prompt them to revise the forecast is how weak the economy will be. So indicators of second-quarter growth will be important. With this number, they will be close to their full-year target," he said.
Joseph Tan of Credit Suisse in Singapore, meanwhile, said the Philippines will be able to meet the P250-billion budget gap ceiling.
"The figures are very much in line with expectations...of course, there will be fluctuations on a month-on-month basis depending on the government's spending patterns," he said.
"I don't think there is going to be something that will worry investors in the short term over the figures," he added. With reports from Reuters and Agence France-Presse
Comments