Deficit seen to rise to P83.6B

The government’s budget deficit could swell to P83.6 billion this year or P8.6 billion more than the programmed ceiling of P75 billion, GlobalSource said in its report on the Philippines.

The think-tank said government finances have recently been “exhibiting disturbing trends” such as missed collection targets and higher-than-expected expenditures.

“While government statements reveal commitment to the deficit target of one percent this year and 0.5 percent next year, it runs the risk of breaching its targets, especially without the inflation windfall, if it continues to underperform revenue targets,” GlobalSource said.

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, 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.

However, in a report authored by former Finance Undersecretary Romeo Bernardo, GlobalSource believes that the government will not throw away the gains from fiscal consolidation that has been achieved over the years.

Bernardo said the government is still likely to achieve its balanced budget goal in 2010.

Nevertheless, Bernardo warned of risks in the coming months such as a decline in revenues brought about by the lowering of the corporate income tax rate by 2009, the exemption from income tax of minimum wage earners and the underachievement of privatization revenues.

He noted that there are risks to the government’s fiscal consolidation efforts and to the economy and general such as “stresses in the economy” brought about by political uncertainties.

“Some political analysts are of the view that cha-cha efforts will be pursued by the leadership by all means and at all costs, “ GlobalSource said. It also added that the global recession may be worse than expected.