Drastic expenditure cuts needed to meet budget deficit target of P145B

The National Government exceeded by P2.9 billion its deficit target for August as a result of both overspending and lower revenue collections.

In the weekly Cabinet meeting at Malacañang last Tuesday, Finance Secretary Jose Isidro Camacho said the government will have to slow down in its spending for the rest of the year if it is to meet its deficit target of P145 billion for the whole year as President Arroyo had committed in her state of the nation address (SONA) in Congress last July.

According to Camacho, the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) turned in a combined collection of only P365.6 billion, 0.44 percent or P1.6 billion short of target.

On the other hand, he said, expenditures of the government reached P465.1 billion or exceeding by 0.27 percent or P1.27 billion the programmed deficit ceiling.

Camacho said the total deficit for the first eight months this year was P99.5 billion or 2.9 percent more than the target. He said the government was doing alright from January to July with the monthly deficit staying below the ceiling. It was only in August that the ceiling was exceeded "due to increased government spending" for countrywide development, payment for the internal revenue allotments to local government units, and implementation of priority projects of the Arroyo administration under the Agriculture and Fishery Modernization Act (AFMA), he said.

Speaking later at the annual membership meeting of the Financial Executives of the Philippines (Finex) at the Hotel Intercontinental in Makati City last Tuesday, President Arroyo said the government will continue to adopt a prudent fiscal policy to keep its budget deficit under control so that interest rates will remain in single digit and help stabilize business conditions during these critical times.

"Advance estimates for September indicate that we’re back to programmed ceiling," the President reassured.

President Arroyo pointed out that her administration’s economic policies have proven to be effective as shown by the performance of the Philippine economy for the first semester this year.

"I hope that what we ever did right in the first semester this year, whatever we did together in the first semester of the year, we should do with even greater vigor in the second part of the year," she urged.