Worst case scenario is 'over P300-B'

MANILA - Amid difficulties caused by the economic crisis, natural calamities, and failed bids of state-run assets, the government is sticking to its P250-billion budget gap target for 2009.

In the first 8 months of the year, the Philippines incurred a fiscal shortfall of P210 billion, only P40 billion shy of the government's full-year target.

Despite this, Finance Secretary Margarito Teves expressed optimism that the government will manage to bid out some 30 state-run properties up for sale this year, helping them boost revenues.

"Hopefully we can get proceeds this quarter from the sale of assets...The 'medium' estimate (for the deficit) is still P250 billion," Teves told reporters at the Philippine Economic briefing in Makati City on Wednesday.

Specifically, Teves said they are banking on the sale of the government's stake in diversifying conglomerate San Miguel Corp. (SMC) worth P50 billion, 103 hectares of agro-industrial estate Food Terminal Inc. (FTI) worth P13 billion, and a 40% stake in Philippine National Oil Co.-Exploration Corp. (PNOC-EC).

If the sale of these 3 assets will not push through, Teves said the Philippines is likely to incur a fiscal shortfall of "over P300 billion" by year-end.

"Over P300 billion is the worst case scenario (for the budget deficit). If we can get SMC, it will help us maintain P50 billion," he said.

Just last week, the government failed to sell the FTI property in Taguig city for the third time after bidders skipped the sale.

Priorities

To sustain economic growth in times of crises and calamities, President Arroyo said state-run National Development Corp. may issue reconstruction bonds this year.

The proposed bond float and other financing plans will be studied by a public-sector commission headed by Teves, businessman Manuel V. Pangilinan, and Cardinal Jose Vidal.

"We may issue reconstruction bonds, whether peso or dollar, to which the mulitaterals such as the World Bank and the ADB (Asian Development Bank) may subscribe to," she said in her keynote speech on Wednesday, not specifying the amount that they are intending to raise from the bonds.

Teves, however, said they would likely float $500 billion in global bonds should the Philippines decide to tap international markets to fund costs of rebuilding typhoon-hit areas.

On top of this, President Arroyo said the group may hold an international pledging session next month to raise grants to fund the government's reconstruction projects, adding that they will also push for concession loans.

According to the President, commercial borrowings should be the government's "last financing option."

"(We are prioritizing grants and government bonds since) we want to reduce our debt-GDP ratio...We don't want to let grant opportunities go to waste," she said.

Government data showed that the Philippines lost some 650 lives and nearly P5 billion worth of infrastructure due to floods and landslides caused by storms "Ondoy" and "Pepeng" (international code names Ketsana and Parma, respectively).

On the other hand, the agriculture department said the country incurred about P18.4 billion in farm losses. -- By Karen Flores, abs-cbnNEWS.com, with a report from Reuters