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By Darwin G. Amojelar, Reporter
The government is expecting a
budget deficit of 0.5 percent of gross domestic product (GDP) next
year owing to global slowdown and costlier food and oil, the
National Economic and Development Authority (NEDA) said Wednesday.
“Depending on the developments,
we are eyeing a deficit of 0.5 percent of GDP or P40 billion to P45
billion, but if conditions improve we will push for a balanced
budget by 2009,” Acting Socioeconomic Planning Secretary Augusto
Santos told reporters during a briefing.
For 2008, the government is
expecting a budget deficit of 1 percent of GDP or P75 billion as it
aims to protect the economy from effects of soaring food and oil
prices. GDP refers to the total value of goods and services produced
in a country in a year.
In 2007, the government posted a
deficit of P12.4 billion.
Under the Medium Term Philippine
Development Plan for 2004 to 2010, it targets a balanced budget by
2010.
Santos said the government could
attain the 5.7 percent low-end economic growth forecast for 2008
despite the 11.4 percent inflation rate in June.
“At least the low end of the
[GDP] target will not be threatened,” he added.
The Development Budget
Coordinating Committee targets a GDP growth of 5.7 percent to 6.6
percent for 2008.
If the situation worsens, Santos
said, the government may revise again the country’s economic
growth projection by September.
“If the trend is really sharp,
we will have no choice but to adjust targets,” he added.
The economy, as measured by GDP,
grew 5.2 percent during the first quarter of 2008.
NEDA said that for every
1-percent increase in transportation fare, the inflation rises by
0.017 percentage point and if the peso depreciates by 1 percent,
inflation will increase by 0.15 percentage points.
The government earlier approved
the fare hike by P0.50 for jeepney, P1 for bus and P10 for taxi.
NEDA said that for every
1-percent increase in the price of oil, inflation will go up by
0.067 percentage points.
The Bangko Sentral ng Pilipinas
expects inflation this year to average 7 percent to 9 percent, above
the government target of 3 percent to 5 percent and 2007 actual
average of 2.8 percent.
On the 12-percent expanded
value-added tax (E-VAT), Santos said, only lawmakers can lift it.
“The E-VAT is a legislated
undertaking. It is a law so if we want to remove or fix it, it has
to be approved by Congress,” he pointed out.
He warned, though, government
funding for social and infrastructure programs will be adversely
affected by the lifting of E-VAT.
“We are carefully studying the
suspension of VAT particularly on oil, because that would mean less
revenues for the government and less expenditures on the social and
infrastructure sectors. There is a tradeoff involved. While we may
alleviate suffering in the medium term, we may have difficulties in
funding public investment but that is an option that we are looking
into,” Santos said.
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