Arroyo says gov't taking steps to trim budget deficit

MANILA (AFP) - Philippine President Gloria Arroyo said Monday she would take steps to trim the country's budget deficit amid warnings that poor tax collections in the first half is putting fiscal reforms at risk.

Last month the government said weak tax collection pushed the first half budget deficit to 41 billion pesos (899.71 million dollars), exceeding the 31.3 billion-peso target for the six months to June.

Arroyo, speaking to a business group, said the drift has been arrested.

"Let us put the shortfall in context. We were not on target for the first half of this year but we have met our target for July," she said without giving figures.

Arroyo said she would form a "revenue enhancement task force" as well as an "anti-smuggling task force" to ensure the government reached its fiscal targets for the year.

The fall in tax collection has caused international credit rating agency Fitch Ratings to warn that the full-year budget deficit for 2007 would reach 125 billion pesos or 1.9 percent of gross domestic product, double the government's target ceiling of 63 billion pesos.