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By Chino S. Leyco, Reporter
DESPITE a widening budget deficit, the
Department of Finance said the government is sticking to its plan to
balance its budget this year.
Finance Secretary Margarito Teves said the
country is better prepared to weather external shocks with prudent
fiscal management, adding it is important the government generates
enough revenues to support its higher spending for infrastructure
and cushion the domestic impact of a weakening US economy.
The US is the Philippines’ biggest export
market, and is the largest source of overseas Filipino remittances.
“We’re still going for ensuring that we have
the resources to fund our expenditures and maintain fiscal
discipline, and that hopefully will be reflected in a
balanced-budget. So the priority is getting revenues to support
expenditure programs,” Teves said.
To generate ample revenues, the finance
department is working to ensure that its privatization program turns
in the programmed P29.6 billion for this year to supplement tax
collections, the finance secretary said.
“Then we can achieve our goal of spending for
infrastructure, funding the budget and at the same time maintaining
discipline,” he added.
Last Friday, the finance department announced
that the government incurred a P19 billion budget deficit last
February, a reversal from the P11 billion surplus recorded in the
same month last year.
In 2007, the government narrowed its fiscal gap
to P12 billion on the strength of P90 billion in revenues from the
sale of state assets. The record privatization proceeds made up for
the poor collection performance of the Bureaus of Internal Revenue (BIR)
and of Customs, both of which account for about 80 percent of
government revenues.
The two agencies have asked the finance
department to trim their respective collection targets this year.
Teves however had thumbed down such suggestions.
“If we take out privatization last year and
this year, there’s a net improvement because of the improvement in
the tax revenue collection,” he said.
The finance secretary said the government must
be prepared to spend more “in case it is necessary to do so” in
light of the damping effects of a US slowdown”.
“But of course the challenge is to look for
the resources to support higher levels of spending over and above
what was incorporated in the budget,” he said.
“The situation in the US might change in the
next few months. We have to be prepared, but to say that we need to
spend more than what is [incorporated in the budget is] probably
difficult to handle at the moment. We must be prepared for it but we
still have to wait for these developments,” he added.
Apart from the US slowdown, the government plans
to jack up its subsidy to keep food prices from rising faster. It
already cut the tariff on imported oil to temper the domestic impact
of more expensive fuel in the world market.
Inflation last month shot up to a 20-month high
on faster increases in the price of oil and food items. Rising
concern for inflation led the Bangko Sentral ng Pilipinas (BSP) to
suspend further cuts in its overnight rates.
The BSP had been slashing its policy rates in
lock step with its US counterpart, the Federal Reserve, to prevent a
wider differential in interest rates, which would cause the peso to
shoot up vis-à-vis the dollar.
Overseas Filipinos and exporters have been
complaining the local currency’s rapid appreciation as it has
eroded their dollar earnings.
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