Budget deficit to exceed P250-billion ceiling

MANILA, Philippines - The government’s budget gap will likely exceed the P250-billion deficit ceiling for 2009 because of the need to spend more for rehabilitation efforts following the onslaught of typhoon “Ondoy,” Philippine Equity Partners, Inc. (PEP), a local investment and research firm said in report released yesterday.

“The budget deficit may widen further on rebuilding efforts. We also expect a negative impact on consumption spending as residents rebuild their lives sans luxury and leisure goods,” PEP said in a commentary.

The government’s budget deficit has already widened to P210 billion from January to August, only P40 billion shy of the ceiling and almost seven times more than the P31.7 billion deficit registered in the same period last year, latest data from the Department of Finance showed.

In August alone, the budget deficit hit P22 billion, reversing the P1.7 billion budget surplus recorded in the same month last year.

The think-tank said the typhoon that devastated Metro Manila and Central Luzon last Saturday is also expected to pull down the economy by slowing down government revenues and consumption spending.

PEP cited that in 2006, when typhoon Milenyo hit the country, it also slowed economic growth.

“The adverse impact is likely to be replicated in 2009 and comes at a time when overall economic growth is much weaker than in 2006,” the research firm said.

It noted that property markets in affected areas such as Marikina, Pasig, Bulacan and Cavite — would most likely see prices collapse.

PEP noted that while insurance companies may cover the costs of damage on properties and infrastructure, this would still be not enough to help the victims.

The death toll from tropical storm Ondoy has risen to 240 as of Tuesday morning.