MANILA - The Philippines' budget deficit may reach as high as P320 billion ($7 billion), or about 4% of GDP this year, if the government fails to sell state assets before year-end, a senior official said on Tuesday.

There is a high possibility no sales would be coming in the following weeks, Finance Undersecretary Gil Beltran told Reuters.

"My scenario is that without privatizations, it would reach P280 billion to P320 billion. But I don't know what the outcome will be," Beltran said. "Given the late hour, there may be no more (sales)."

Some analysts have forecast a budget deficit of as much as P350 billion this year after the global recession hit corporate incomes and therefore state revenues.

But a 2009 fiscal shortfall of above P300 billion would not rattle markets, which are now looking for what the government would do to contain the budget gap in 2010.

The Philippines plans to limit its budget deficit next year to P233.4 billion or 2.8% of GDP.

Last month, the government said it had exceeded its full-year budget deficit target of P250 billion, or 3.2% of GDP, just 10 months into the year. But it said it was still hopeful of selling some assets before the year ends to shore up revenues.

Manila has had difficulty selling a 103-hectare commercial estate Food Terminal Inc, which the government had valued at around $279 million, due to conflict with buyers on payment terms. It also pushed back a scheduled sale this month of a prime property in Fujimi, Japan, worth P3 billion.

Its biggest asset in the auction pipeline -- preferred shares in food-to-power conglomerate San Miguel Corp. worth about P56 billion -- is still subject of a pending ownership case in the courts.