Teves: Budget deficit for 2009 stays at P102B
abs-cbnNEWS.com | 12/16/2008 11:00 AM
Printer-friendly version | 
Send to friend | 
Share your views
Even with the global economic slowdown, the Department of Finance (DOF) is confident that the country's budget deficit next year will not hit the ceiling set by multilateral lending agencies.
According to finance secretary Margarito Teves, the government would limit the budget shortfall next year to P102 billion or about 1.2 percent of the country's gross domestic product (GDP), instead of the 2 percent GDP or the P170-billion ceiling set by the International Monetary Fund (IMF), World Bank (WB), Asian Development Bank (ADB), and many others.
“I don't think so, the two percent cannot be used as a universal formula. Each country has its unique peculiarities and we have to be more prudent than having a two percent of GDP budget deficit,” Teves said in an interview.
What needs to be done, Teves said, is for the government to raise additional revenues by improving tax collection efforts of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC), sell more big-ticket assets, and spend more to cushion the impact of the global financial crisis, which is expected to be more evident next year.
“We have to be sensitive to what extent can we raise deficit some more. There is no fixed formula on this deficit spending. We have to be sensitive on how it would affect our exchange rate and our interest rates because we have a large debt,” he said.
Teves said that the government should also consider the absorptive capacities of its various agencies, especially those which are tasked to implement much-needed infrastructure programs and social services.
“We also have to consider the absorptive capacity because even if we put in resources, the government agencies responsible for implementing the project should have the capacity to make use of all the resources,” he said.
Aside from revenues, the government is relying heavily on foreign and domestic borrowings to finance the budget deficit and at the same time pare down its maturing obligations.
The government intends to borrow P509.9 billion from both foreign and domestic creditors next year, P72.8 billion more than the programmed borrowing of P437.1 billion under the 2009 Budget of Expenditures and Sources of Financing.
Of the total amount, about P386.5 billion or 76 percent would be sourced from domestic creditors, while P123.4 billion would come from foreign creditors including multilateral lending agencies such as WB, ADB, Japan Bank for International Cooperation, and others.
As early as May, the Arroyo administration has abandoned its commitment to balance this year's budget due to adverse external developments brought about by high oil and food prices. It is now expecting to post a P75-billion budget shortfall or 1 percent of GDP this year, from last year's P12.4-billion or 0.2-percent GDP.
