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By Chino S. Leyco, Reporter
STANDARD & Poor’s Ratings Services
(S&P) said the Philippines is likely to end the year with a
budget deficit amounting to one percent of the domestic economy.
Agost Benard, S&P analyst, said the
government may end up with a budget deficit of that is one percent
of gross domestic product (GDP), or equivalent to P75 billion. This
is in line with the finance department’s estimate for this year.
“If the deficit comes in below this level, one
hopes that it will have been on account of improved revenue
performance, instead of curtailed capital spending,” Bernard told
The Manila Times.
The Philippines has already put off a plan to
balance its budget this year, as the government cranks up spending
to cushion the public from the adverse impact of rising inflation
and a slowing economy.
Last month, inflation rose to a 14-year high of
11.4 percent as costs of food and fuel soared.
“Revenues should certainly benefit from higher
inflation. However, what would be positive for the sovereign credit
fundamentals is a permanent increase in revenue generation capacity
based on an expanded revenue base and improved revenue collection
and administration, as distinct from a cyclical rise in revenues
owing to higher nominal GDP growth,” Benard said.
In February, S&P upgraded the Philippines’
outlook from “negative” to “stable,” based on indications
that the implementation of government fiscal reforms would be
sustained.
Finance Secretary Margarito Teves had said
government’s revenue collection as of May remain on track, adding
the Bureau of Internal Revenue had exceeded its goal during the
period.
In May, the government recorded a budget surplus
of P7 billion, reversing the P1.7-billion deficit in the same period
last year.
Finance Undersecretary Gil Beltran said the
government may have beaten its first-half budget deficit goal of P41
billion courtesy of the positive collection performance of the two
main tax agencies.
Beltran said excess revenue from oil is seen to
rise further than the earlier estimate of P18.6 billion after the
commodity continued its record-breaking run hitting above $145 a
barrel for the first time.
“If we go higher than P18.6 billion, we will
make sure we will focus on the poor. We are allowed to spend on
items like [subsidies and social services] if we exceed our
projected revenue. We have the flexibility,” Beltran said.
At end-May, expenditures amounted to P501.2
billion, higher by 5.7 percent from P474.4 billion last year.
Teves also said the government will continue to
increase spending in the remaining months of the year, as it plans
to sell more assets.
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