Govt likely underspent in 2013

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The fiscal deficit in 2013 may not have reached the programmed ceiling of P238 billion, which analysts said, would indicate the government underspent during the year.

Official fiscal data is expected to be released in the next few weeks.

“We expect the 2013 deficit to amount to P230 billion, which is about 2 percent of GDP [gross domestic product],” Joey Cuyegkeng, ING Bank Manila’s senior economist, said in his latest financial market report.

“The fiscal deficit target for 2014 is set at P266 billion. We expect a mild underperformance equivalent to 2.1 percent of GDP,” Cuyegkeng said.


For 2013, Cuyegkeng estimates that spending growth ran at about 9 percent year-on-year, lower than the programmed 11.6 percent.

Cuyegkeng said that the underspending could come in the form of savings on interest payments, which are estimated at about P328 billion.

“The one-year yields [on government bonds]averaged at 1.24 percent, which was slightly higher than the 1 percent to 3-percent 2013 budget assumption,” he said.

Furthermore, spending might have also “moderated” as a result of the pork barrel scam and the Supreme Court ruling on the fund’s unconstitutionality, as well as questions against the government’s Disbursement Accelerated Program, he said.

At the same time, Cuyegkeng also expects that the requirements for the rehabilitation and reconstruction of areas devastated by Super Typhoon Yolanda might have helped trigger a rebound in spending in December.

Meanwhile, for Alvin Ang, economics professor at the University of Santo Tomas, a fiscal deficit is quite good for the fiscal health of the economy.

“[A fiscal deficit] means less government borrowing and less pressure on interest rates to rise,” he said.

To date, government expenditure in November alone stood at P164 billion, bringing year-to-date figures at P1.677 trillion, reflecting 9-percent growth over the comparable expenditure in 2012.

Interest payments for November inched up 2 percent above the programmed level. However, year-to-date interest payments of P296.7 billion remain below the government’s cap of P302.8 billion, reflecting interest savings of P6.1 billion.

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