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By Chino S. Leyco Reporter
AFTER Philippine economic
managers put off a plan to balance the budget this year, the
Department of Finance said Wednesday that the programmed fiscal gap
can still be narrowed by almost half.
Finance Secretary Margarito Teves
said the government can end up with a P40 billion budget deficit
this year, or P35 billion lower than the newly programmed P75
billion, which is equal to one percent of the country’s gross
domestic product (GDP).
“The P75 billion is the worst
case for the meantime, and its the arbitrary right now. But of
course the medium scenario would be roughly P40 billion,” Teves
said on the sidelines of his confirmation at the Senate as finance
secretary.
With a possible lower than the
programmed budget gap, Teves said it is still hard to predict
whether a balanced budget can be attained next year. “It’s so
hard to predict now for next year because events are moving very
fast,” he said.
“For the balanced-budget, 2010
now is our goal but things might develop differently next year. We
didn’t know that we will have this kind of confluence of events
this year. It is too early to be worried about whether we will have
a balanced-budget next year. We need to put more effort, time and
concern for this year,” he added.
The Development and Budget
Coordinating Committee (DBCC) earlier set a P75-billion budget
deficit ceiling this year due to demands for higher public spending
to cushion the impact of skyrocketing oil and rice prices.
But despite the deferment, Teves
said the tax collection target of the Bureaus of Internal Revenue (BIR)
and of Customs remains intact at P1.1 trillion, adding the
government expects an P18.6-billion revenue windfall from the 12
percent value added tax (VAT) on oil.
He, however, did not rule out a
lower deficit of P30 billion this year and a balanced budget by next
year provided the BIR and Customs exceed their collection targets
“It can be 2009, depending on
how we’ll handle 2008. But I’m saying that the worst we’re
expecting really is not more than 1 percent of GDP,” the official
said.
Teves said the government will
undertake a second round of foreign commercial borrowing this year,
adding the issue may range from $500 million to $750 million.
“But we would like to find out
if we can still increase the [disbursement] of [the] ODA component,
because [it] is cheaper. So we’ll see if we can get more of the
quick disbursing project loans,” he said, referring to official
development assistance or foreign donor aid, which carries lower
interest rates.
The inter-agency DBCC, which sets
the country’s macroeconomic goals and assumptions, also cut its
GDP growth forecast this year to between 5.7 percent and 6.5
percent, from the original 6.3 percent to 7 percent.
Inflation is expected to average
from 5.5 percent to 6.5 percent, higher than the earlier 3 percent
to 4 percent range. This is on account of a higher forecast for
Dubai crude, the country’s benchmark for the commodity at between
$95 and $105 per barrel, from $80 to $90 a barrel previously.
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