The PIDS, in a recent study, projected that government would go beyond its budget deficit target this year of P145 billion by about P7 billion.
The deficit will even be bigger in 2002. The PIDS projected next year’s budget deficit to deteriorate by as much as P47 billion.
In a study, PIDS’ Rosario Manasan stated: "Analysis shows that the speed of fiscal consolidation that is envisioned in the President’s budget for 2002 will not be achieved. It is projected the fiscal deficit targets that are set in the proposed budget will be exceeded by P7.2 billion in 2001 and by P29.3 billion to P46.6 billion."
PIDS said the National Government’s budget deficit woes are not expected to ease because it continues to be plagued by poor revenue performance.
The government’s primary tax collection agencies, the Bureau of Internal Revenue and the Bureau of Customs, are unlikely to meet their respective targets.
PIDS said the BIR despite revenue enhancement measures will not be able to meet its target of P388 billion, along with the BOC which targeted P5.1 billion.
The PIDS said the taxt revenues will be P10.9 billion short of the goal. In turn, the deficit is likely to hit P153 billion which is four percent of the gross national product (GNP) in 2001 unless government imposes further reduction in its already emaciated expenditure program.
PIDS said large deficits often lead to fiscal instability.
"As government debt accumulates over time, interest payments may increase as government pays interest not only on debt it had incurred in the past but also on new debt issued to cover the deficit of the current year. This results in even larger deficits and higher levels of government debt stock, leading to an explosive situation," the paper stated.
Previously, Finance Secretary Jose Isidro Camacho doused apprehensions government will not be able to attain its budget target for this year.
He said government is expecting additional revenue of about P13 billion from the Philippine Amusement and Gaming Corp. and the sale of a property by the Philippine Estates Authority which should allow it to keep the deficit at P145 billion.