MANILA, Philippines - Former Finance Secretary Margarito Teves supports the Aquino administration’s position to increase public spending instead of balancing the budget.
Teves, who is now chairman of Think Tank, Inc. said balancing the budget is not necessary at this time. What is necessary, he said, is to keep the deficit at a manageable level and the deficit, as a percentage of gross domestic product (GDP), within target.
This year, the government is eyeing to contain the budget gap at 3.2 percent of GDP or roughly P300 billion.
Teves said that given the uncertainty in the United States, the government needs to boost investments and public spending.
The key, said the former Finance chief, is to increase investments in good projects and “overspend” on social services such as education and public health.
When he was Finance chief, Teves had planned to wipe out the budget deficit as early as 2008 and then in 2010 but was forced to abandon this goal due to rising oil and food prices and the 2008 financial crisis that started in the US.
The Aquino administration, for its part, said balancing the budget is not among its priorities. “Balancing the budget for its own sake is not something that we want to pursue,” Finance Secretary Cesar Purisima said.
From January to June, the government incurred a budget deficit of only P17.23 billion, significantly narrower than the goal for the period of P152.128 billion, mainly because of underspending.
On the issue of new taxes, Teves said the government should consider slapping new taxes as this is a more effective way of raising revenue.
The Aquino administration, however, is firm in its position that it would plug tax leaks first before slapping new tax measures.