RP to move balanced budget target to 2016

MANILA, Philippines - The government is looking at moving its balanced budget goal to 2016 instead of 2013, according to sources at the interagency Development Budget Coordination Committee (DBCC).

Sources said the DBCC, the interagency committee that sets the country’s macroeconomic targets and assumptions, is discussing postponing the balanced budget goal given the country’s fragile fiscal position.

However, nothing is final yet as DBCC members want to leave the decision to the next administration, sources said.

Asked about this yesterday, Finance Secretary Margarito Teves said in a text message that nothing is final yet.

Originally, the government had planned to wipe out the budget deficit by 2010 but moved this to 2013 because of weak revenues.

To shore up revenues, Teves has said that he would recommend to the next administration raising the value-added tax rate to 15 percent from the current 12 percent alongside a reduction in the income tax rate to 25 percent from the current 12 percent.

The government would also push for raising sin taxes on alcohol and cigarettes, rationalizing the fiscal incentives given to investors and simplifying the country’s net income taxation system.

Sources at the DBCC said revenues have been problematic because of the government’s failure to privatize state-owned assets as programmed.

The government has yet to sell any of the three major big-ticket items it has been planning to sell for many years now. These include the P13-billion Food Terminals Inc. property in Taguig, the assets of Philippine National Oil Company-Exploration Corp. in the Malampaya project, estimated at at least P14 to P15 billion and the long-term lease and development contract of the government’s real estate property in Fujimi, Japan for P3 billion.

The government has programmed to contain the deficit at P293 billion this year from P298.5 billion last year.

As of February, the budget gap was P70.3 billion, wider than the P67 billion recorded a year earlier.

The government is scheduled to announce the first quarter fiscal data today.