Government to contain budget deficit at 3.2% of GDP

MANILA, Philippines -  The Aquino administration will try to contain this year’s budget deficit at 3.2 percent of gross domestic product (GDP) despite the slower economic growth recorded in the first half of the year, Finance Secretary Cesar Purisima said yesterday.

“It’s still at 3.2 percent of GDP,” Purisima noted when asked if the Finance department would be recommending a revision in this year’s budget deficit ceiling.

The government has set a deficit ceiling of P290 billion or 3.2 percent of GDP for the year. This is lower than last year’s actual budget gap of P314.4 billion or 3.7 percent of economic output.

On Monday, the National Statistical Coordination Board (NSCB) reported that the Philippine economy grew by 4.9 percent in the first quarter of the year, significantly slower than the 8.4 percent recorded in the same period last year.

Government statisticians attributed the lackluster performance of the economy to slower government spending and a slowdown in global economic trade.

Another Finance official said although the government would try to keep the deficit ceiling at 3.2 percent of GDP this year, the nominal figure may fall below P290 billion as the government will try to boost spending to improve the country’s economic performance.

Nevertheless, the interagency Development Budget Coordinating Committee (DBCC), the group that sets the country’s macroeconomic targets and assumptions, is set to review the government’s deficit ceiling for 2011 because of the slower economic growth recorded in the first half of the year.

DBCC would likely review the growth targets and macroeconomic assumptions including the deficit ceiling for the year.

In April, the National Government posted a surplus of P26.258 billion, the highest April surplus recorded in recent years brought about by lower state spending alongside an improvement in revenues.

This as expenditures fell below last year’s disbursement despite an improvement in revenues.

The April surplus reflected a 910.31 percent increase over the P2.599 billion-surplus posted in the same month last year.

Furthermore, the April surplus brought the four-month fiscal surplus to P61 million, reversing the P131.80 billion-deficit incurred in the same period last year.

Revenues from January to April rose to P461.413 billion or 18.22 percent higher than the P390.292 billion generated in the same period last year.

Expenditures, on the other hand, amounted to P461.352 billion during the period or 11.6 percent lower than the comparable disbursements in 2010.