Fiscal blowout breaches P250B

11/19/2009

The budget deficit has breached its full year limit of P250 billion after hitting P266.1 billion in the year, a new record high, until October prompting the Department of Finance (DoF) to move the year’s target to P280 billion.

The consensus among analysts, however, is that the budget blowout will exceed P300 billion by the end of the year.

For October alone, the budget deficit was 28.5 billion or more than three times bigger than that of last year.

“This is extremely stressful, everything,” he said of the present and of what lies ahead.

Ten-month revenue flows have fallen 4.8 percent to P925.4 billion that contrasted with a rise in public spending during the period to fund reconstruction and rehabilitation efforts by 15.1 percent to P1.191 trillion from P1.034 trillion a year ago.

Expenditures also grew by 12.3 percent in October alone to P114.1 billion from a year ago of P101.6 billion.

The Bureau of Internal Revenue has fallen way behind in both its 10-month as well as its October revenue goals by 5.1 percent and 3.6 percent, respectively.

Collections from January to October totaled P798.5 billion and P54.9 billion for October alone. The Bureau of Customs’ 10 month collections were also behind by 15.7 percent to P183.9 billion while its October performance netted only P18.5 billion.

Their officials attribute the poor performance to setbacks in corporate income tax collection and tax breaks to salaried workers

“We realize that we have already breached our full-year deficit ceiling of P250 billion as of end-October. But we will continue to work harder and endeavor to be more effective in implementing our tax administration measures,” Teves said at a briefing.

The deficit in the first 10 months is 326.9 percent higher than year-ago’s P62.3 billion deficit and is P16.1 billion higher than the full-year target.

“(The deficit) was due largely to weak revenue collection which was adversely affected by the economic slowdown,” Teves said.

“The growth in expenditures was offset by the nearly 20 percent reduction in interest payments for the month due mainly to lower rates,” Teves said.

Teves said given the fiscal performance in the first 10 months this year, they are still keeping their fingers crossed that items included in this year’s privatization list will be sold.

The government is eyeing P30 billion from the sale of its shares in Philippine National Oil Co.-Energy Corp. (PNOC-EC) as well as the sale of some parts of the Food Terminal Inc. (FTI) in Taguig City, and 25-year lease of the government’s real property in Fujimi, Japan, where the Philippine ambassador to Japan resides.

Teves said they will know the path of the privatization on this “by the end of the month.”

He said they also remain hopeful for a positive decision by the Supreme Court regarding the sale of the government stake in San Miguel Corp. (SMC), eyed to bring in P50 billion unprogrammed revenues this year.

Although the P50 billion possible revenue from the sale of the government’s stake in SMC is not included in this year’s program, Teves said the proceeds from this has been factored in their medium-term scenario.

“We don’t need to be sacrosanct on what factors are programmed (since) what is important is there are factors that will be helpful to compensate other factors that did not turn out,” he added.

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