Full-year 2009 target was P250 billion

MANILA, Philipppines (1st UPDATE) - The Philippines incurred a budget deficit of P6.4 billion in November, bringing the deficit for the first 11 months to a higher-than-targeted P272.5 billion, no thanks to poor revenue collection, Finance Margarito Teves reported on Monday.

The November figure was P2.1 billion higher than what was recorded in the same month of 2008, while the 11-month figure was 4 times that of last year and P22.5 billion higher than the P250-billion ceiling for 2009.

"Given our fiscal performance in the first 11 months, we are moving closer to an emerging deficit of about P300 billion this year," Teves said in a statement.

The finance chief said revenue-eroding measures, slower growth, and the negative impact of typhoons on tax collection were to blame for the worse-than-expected deficit in January to November.

Year-to-November revenues amounted to P1.02 trillion, down 5.5% compared to last year. The Bureau of Internal Revenue, the government's main tax agency, contributed P681.9 billion, 5.5% lower year-on-year, while the Bureau of Customs contributed P201.4 billion, down 16.6%.

For November alone, government revenues reached P102.7 billion, 9.4% lower than last year's revenues.

Teves said they intend to keep this year's deficit at P300 billion or 3.8% of gross domestic product, "which most international institutions find acceptable to ensure sustained economic growth amid the global financial crisis and the required increased spending due to damages caused by recent typhoons."

Next year, Teves said the government will adjust its fiscal program to reflect the impact of lower economic growth on its revenue collection efforts and continued accelerated spending to support recovery.

"While we are making these adjustments in our fiscal program to address urgent needs, we believe that there is a need to continue pursuing fiscal consolidation in the medium term," he noted.

The Philippines, one of Asia's biggest sovereign debt issuers, is studying a possible euro-denominated bond offer as part of a $2-billion foreign debt plan to fund its 2010 budget gap, which is seen to reach nearly P300 billion, more than the official estimate of P233.4 billion or 2.8% of GDP. With a report from Reuters