MANILA, Philippines - Economic managers will be meeting today to review next year’s macroeconomic targets, with approval of a wider deficit target a distinct possibility.

"It [2010 deficit] may have to be raised. We have to incorporate realistic assumptions," a ranking Finance department official who requested anonymity told BusinessWorld over the weekend.

The source noted the need to fund typhoon rehabilitation efforts, and added: "We also have to align the 2010 revenues with the revenue-eroding measures. These were not incorporated in the BESF (Budget of Expenditures and Sources of Financing).

"The DBCC (Development Budget Coordination Committee) will meet on Monday to discuss this."

This was confirmed by Budget Undersecretary Laura B. Pascua in a separate interview.

"I think likely," she told BusinessWorld when asked about the possibility of the government widening the P233.4-billion budget gap for 2010.

"Yes it’s possible. There was a revenue shortfall. One of the factors is the passage of revenue-eroding measures. We also have to incorporate reconstruction [activities in storm-hit areas]."

Ms. Pascua said a higher deficit would prompt the government to adjust its borrowing plan for next year.

"Of course, yes," she said.

The Budget official believes the country’s creditors will understand if the government decides to increase next year’s fiscal shortfall.

"I think so. Other countries are experiencing it (a higher deficit). But we also have to improve because we also aim for fiscal consolidation," Ms. Pascua said in Filipino.

Other macroeconomic targets for 2010 will be reviewed in today’s meeting, she said.

"Well, that (next year’s growth target) will be part of the review. If you revised the macro[economic] assumptions it follows that there would be revision on the fiscal side," Ms. Pascua said.

Finance Assistant Secretary Teresa F. Habitan, however, said there was no decision yet on whether to revise the growth forecast for 2010.

"We do not know yet. We will still decide. There are estimates that there may be incremental growth because of reconstruction," she said in Filipino.

The economy is currently expected to grow by 2.6-3.6% next year, faster than this year’s 0.8-1.8% goal.

The government blew past this year’s P250-billion deficit cap in October. It blamed the P266.1-billion shortfall on poor revenues arising from measures such as a lower corporate income tax rate and income tax exemptions for minimum wage earners.

The government had planned on balancing the budget next year but was forced to move this to 2013 given the need to prop up the economy amid the global downturn.

The DBCC, which consists of the Budget and Finance departments, the National Economic and Development Authority and the Bangko Sentral ng Pilipinas, has adjusted the 2010 deficit goal four times from the initial target of zero.

Based on the current 2010 deficit program of P233.4 billion, domestic borrowings are expected to hit P475.19 billion while foreign borrowings will reach P185.17 billion.

The government is also faced with the task to rehabilitate areas affected by recent storms, which would require $4.42 billion or close to P208 billion based on World Bank estimates.