Deficit could widen to P80 B next year

The government’s budget deficit could widen to as much as P75 to P80 billion in 2009, way above the revised deficit ceiling for next year of P60 billion due to lower-than-expected economic growth, Socioeconomic Planning Secretary Ralph Recto said yesterday.

Government economic managers are set to meet next week to revise downward the gross domestic product (GDP) growth target for 2009 from the latest assumption of 4.1 percent to 5.1 percent, Recto said. The original GDP forecast for 2009 was 6.1 percent to 7.1 percent.

“The deficit could hit less than one percent or one percent of GDP which is roughly P75 to P80 billion but we are on track to possibly balance the budget by 2010,” Recto said following a meeting of government economic managers yesterday.

Recto said economic managers are set to meet next week to revise downward the country’s macroeconomic assumptions, taking into account the slowdown in the global economy, which in turn, affects the local export industry.

However, he stressed that his position at the moment is to retain the latest GDP growth projection of 4.1 percent to 5.1 percent for 2009.

“We will meet next week to downscale next year’s macroeconomic assumptions. As of the moment, my position is not to downscale it,” Recto said as he noted that oil prices have been going down since July.

Yesterday, oil firms announced a P5 per liter price rollback for diesel and P2 per liter for gasoline.

Despite the possibility of incurring a wider-than-expected budget gap next year, Recto said the government is still keeping its goal of balancing the budget by 2010.

“When the growth is downscaled, revenues will fall short, that is why we expect the budget deficit to be bigger than P60 billion for next year,” Recto said.

For 2008, Recto said economic managers are inclined to retain the latest GDP growth projection of 4.4 percent to 4.9 percent and the programmed deficit ceiling of P75 billion.

“We’re hoping to hit those targets,” said the National Economic and Development Authority (NEDA) chief.

The government’s budget deficit swelled to P21.6 billion in September or 48.9 percent more than the P14.5 billion posted a year ago as revenue collections in September reached P89.6 billion and total expenditures hit P111.3 billion, latest data from the Department of Finance showed.

The September deficit brought the January to September budget gap to P53.4 billion or P18.2 billion more than the programmed ceiling of P35.1 billion.

In terms of economic growth, GDP grew 4.6 percent in the first half of the year, slower than the 7.6 percent recorded in the same period last year.

In 2007, the Philippine economy grew by 7.2 percent.

Financial markets across the globe have been jittery due to recent developments in the US. Investment banking giants Lehman Brothers and Merrill Lynch have gone bankrupt due to their billion-dollar exposures to the credit crunch in the US mortgage market. The financial meltdown has reverberate beyond US shores, hitting European and Asian markets as well.