RP won't be punished for going over 2009 deficit target - Recto

Rating agencies and the international investment community are not likely to punish the Philippines if it exceeds its P102 billion budget deficit target next year, Socioeconomic Planning Secretary Ralph Recto said yesterday.

Noneteheless, Recto said the government will try to keep the 2009 deficit ceiling at P102 billion or 1.2 percent of gross domestic product (GDP). The revised deficit program is wider than the original ceiling for 2009 of P40 billion.

Recto said that in the event that the government incurs a wider budget gap than the P102 billion programmed ceiling, markets would likely be considerate of external developments.

“I think the market will not punish us if the deficit is at two percent (of GDP),” Recto said.

On the other hand, the National Economic and Development Authority (NEDA) chief said that if the government is able to keep the deficit within the P102 billion programmed ceiling, it would likely be commended by the market.

The Philippines is finding it difficult to achieve a balanced budget by 2010, with the budget deficit expected to swell to P102 billion next year or P62 billion more than the original program of P40 billion due to the difficult global economic tide.

The P102 billion programmed deficit for 2009 took into account higher expenditures of P1.467 8 trillion as the government plans to boost spending next year to help pump-prime the economy. This is above the original program of P1.433 trillion.

On the other hand, the government expects total revenues in 2009 to decline to P1.365 trillion from the original program of P1.393 trillion.

The latest budget deficit projection of P102 billion is above the revised deficit forecasts for 2009 of P75 to P80 billion.

For this year, the government is hoping to contain the budget deficit within the program of P75 billion or one percent of GDP.

The government’s budget deficit swelled to P9 billion in October, a six-fold increase from the P1.5 billion posted a year ago, latest data from the Department of Finance showed.

The October deficit brought the January to October budget gap to P62.3 billion, higher than the P41.5 billion deficit incurred during the same period last year.