MANILA, Philippines - The Bangko Sentral of Pilipinas (BSP) said yesterday that its budget deficit had soared 556.2 percent year on year in the first five months as it increased spending to stave off recession.
The government released figures showing it was P123.2 billion in the red by the end of last month, compared with P18.8 billion at the same point in 2008.
It represents almost half of the government’s full-year target deficit ceiling of P250 billion, although it is still below the government target of P155.1 billion for the period.
“We are confident the government will meet its program,” Finance Secretary Margarito Teves said, with domestic and foreign borrowing likely this year to bridge the budget gap and raise the funds required for stimulus spending.
The Philippines signed an agreement in Tokyo last week in which the Japan Bank for International Cooperation would guarantee 95 percent of up to $1 billion in yen-denominated “Samurai bonds” to be issued by Manila.
“We’re still open to issuing global bonds,” Teves added but stressed that most of the government’s borrowing would be from domestic sources.
He said the higher deficit was largely due to the global economic slowdown, which led to less revenues while forcing Manila to spend more to stimulate the economy.
Teves stressed the government would “continue with our spending on health care, services, infrastructure.”
If it had not been for the global financial crisis, “we would have maintained our target deficit for the year at about P40 billion, Teves said.
He said that based on the latest figures, the government was expecting economic growth of 0.8 percent for the whole of 2009 despite warnings of a shrinkage.
Economic expansion stalled to 0.4 percent in the three months to March as the country continued to be hit by the global slump, which has led to a dive in key exports.
Manila posted an P11.4 billion deficit in May, compared with a surplus the previous month and May last year.
Teves said government spending rose 16 percent from a year earlier to P115.6 billion for the month, and to $579.1 billion for the first five months.
However revenue declined 2.5 percent to 104.2 billion pesos for May and by 5.4 percent to 456.2 billion pesos in the first five months.