May budget deficit of P9.9-B only half of target

The Philippines recorded a budget deficit of P9.9 billion in May, less than half of a government target of P20 billion, the Department of Finance said yesterday.

"Given our cumulative five-month fiscal position, government is confident that we will achieve the full-year deficit target of P202 billion," Finance Secretary Jose Isidro Camacho said in a statement.

The May deficit was narrower than a preliminary May shortfall of P13.5 billion that Camacho had announced last week.

It also brought the government’s deficit for the first five months of 2003 to P75.4 billion, 14 percent inside the target of P87.4 billion.

The latest deficit compares with a deficit of P107.5 billion in January-May 2002, accumulated en route to three blow-outs last year that rattled foreign investors already edgy about rebel violence, pervasive corruption and the pace of reforms.

The government – plagued by poor tax collection stemming from inefficiency, corruption and widespread evasion – has racked up fiscal shortfalls in nine of the past 13 years.

The Philippines’ target for its deficit ceiling this year is the equivalent to 4.7 percent of gross domestic product. The data so far indicates the numbers are shaping up better than in 2002.

But Fitch Ratings, citing the country’s fragile fiscal position, last week downgraded its long-term foreign currency rating on the Philippines to "BB" from "BB-plus" and its long-term local currency rating to "BB-plus" from "BBB-minus".

The Philippines is the largest sovereign debt issuer in Asia, outside of Japan. It has targeted borrowing $2.4 billion offshore this year and still needs to raise around $900 million.

The government has earmarked total foreign and domestic borrowings of around P200 billion this year.