Deficit seen for July

The National Government will likely post a budget deficit for the month of July despite aggressive collection efforts from its revenue-generating agencies, a top finance official said yesterday.

"We never had a surplus for July. The last time we hit a surplus for July was in 1996. It will take some time before we can get a surplus," Department of Finance assistant secretary Gil Beltran said in a press conference.

The July deficit will break the budget surplus streak since February this year. But Beltran said the government is optimistic the deficit would be lower for the entire year.

"Emerging figures show that we could hit P160 billion with or without the value-added tax (VAT)," he said, clarifying though that NG maintains a working target of P180 billion budget gap this year. "Based on the Development Budget Coordinating Council (DBCC) assessment, we can do better than that (P180 billion)."

Aside from the positive development in the budget position, Beltran said they are also expecting the country’s gross domestic product (GDP) to hit 6.3-percent growth rate next year due to combined improvement in overseas Filipino workers (OFWs) remittances and export growth. This is the higher end of the growth target range for 2006 of 5.3 percent to 6.3 percent.

The government has projected more than 10-percent growth in OFW remittances next year.

Despite the relatively positive outlook in 2006, the National Economic and Development Authority (NEDA) has brought down its growth target to 5.1 percent from a range of 5.3 percent to 6.3 percent.

The government is also hopeful that the budget gap next year would reach P110 billion with all tax measures in place and with a proposed budget of P1.3 trillion.

The DBCC, composed of the DOF, Department of Budget and Management (DBM) Bangko Sentral ng Pilipinas, and President Arroyo met last Tuesday to approve the macro-economic and fiscal targets of the government.

Finance Secretary Margarito Teves said they hope to keep the P180 billion target this year. "But we would like to reduce it to lower levels," he said.

Finance Undersecretary Emmanuel Bonoan said they have been trying to look for ways to cover for the foregone revenues due to the non-implementation of the expanded VAT law.

"We have been helping the BIR to find a way to enhance its tax collection. We are looking at the estate and excise tax collections. Mostly, we are zeroing in on administrative measures," he said.