The surplus of P246 million followed a P7.6-billion deficit in May and a P2.8-billion deficit a year earlier. The median forecast in a Bloomberg News survey of seven economists was for a P1.2- billion deficit. The P3.3-billion surplus reported for April was the first monthly surplus in exactly four years.
For the first six months, the deficit totaled P67.5 billion, less than the government’s P98.5 billion estimate for the period, Cruz said. That’s 38 percent of the government’s P180 billion estimate for the year.
President Arroyo, whom the opposition is pressuring to resign amid allegations she cheated in last year’s elections, needs to assure investors that her government can cap the deficit after the Supreme Court on July 1 froze a value-added tax law at the center of her plan to avert what she called a "fiscal crisis."
The law, which was passed in May, expanded the tax to fuel, electricity and other previously-exempt products and services. It also allowed the president to raise the rate next year, capped tax credits and raised the corporate income tax, provisions which petitioners told the Supreme Court made the law unconstitutional.
The court, which is hearing oral arguments may rule within a month, according to its spokesman.
Moody’s Investors Service Inc., Standard & Poor’s and Fitch Ratings this week cut the outlooks on their junk debt ratings for the Philippines to negative from stable, citing the suspension of the VAT law and political concerns.
A negative outlook indicates the rating companies are more likely to cut the ratings, which may prompt investors to demand higher yields when the government sells $850 million of bonds later this year.