NG incurs P19-B budget deficit in February

Finance Secretary Margarito B. Teves said yesterday the National Government (NG) would still try to balance the budget in 2008, even as the February fiscal position reversed last year’s P11.1-billion surplus to a P19-billion deficit.

The February deficit was recorded as the Arroyo administration faces the possibility of having to increase its spending on rice price subsidies as regional supply problems triggered double-digit increases in consumer prices.

Data from the Department of Finance (DOF) showed that the February budget deficit stemmed from the increase in expenditures on the back of declining revenues.

The DOF said the overall fiscal position in January to February led to a P32.9-billion deficit, increasing dramatically from P18.6 billion over the same period last year.

In January, the deficit was recorded at P13.9 billion but Teves said the government has been front-loading its expenditures in an attempt to temper the dampening effect of the global economic slowdown on the country’s own growth momentum.

Teves said the February deficit occurred despite the improvement in the tax collection of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) whose February collections amounted to P50.9 billion and P15.7 billion respectively.

Total revenues increased by four percent to P168.8 billion in the first two months of the year from P162.3 billion a year ago. The BIR accounted for the bulk that amounted to P107.6 billion which was 18 percent more than last year’s collection of P91billion.

In February alone, spending surged by 28.3 percent to P100.8 billion compared with P78.5 billion last year.

The decline in revenues, however, resulted directly from a one-time revenue windfall in 2007 when the Arroyo administration unloaded a significant amount of assets.

This year, Teves admitted the government did not have a similar fall-back and spending would have to be funded out of revenues generated from taxes and other recurring sources.

“The challenge is to make sure we have the revenues to support a higher level of spending,” Teves said. “We are still going for ensuring we have the resources to fund our expenditure and maintain fiscal discipline and that, hopefully, will be reflected in a balanced budget.”

The Arroyo administration has been promising to balance the budget for the first time since it took over in 2001 but its fiscal turn-around last year depended largely on the sale of big-ticket assets owned by the government.

The government generated additional revenues of P90.6 billion from the sale of its assets last year and pared the deficit down to P12.4 billion by yearend.

The IMF report said that with strong reforms in place, the Fund’s growth forecast corresponded with the government’s target of 6.3 to seven percent for 2008.