PNoy economic team predicts lower deficit
IN THE face of controlled spending and improved collection, the government is confident of scoring a deficit “upset” this year by closing 2010 with a lower-than-programmed budget shortfall than its goal of P325 billion or 3.9 percent of the gross domestic product (GDP).
Members of the government’s economic team yesterday said there was a big likelihood that the budget deficit this year would be lower than the target after reining in spending in the third quarter and also in the last quarter.
Budget Secretary Florencio “Butch” Abad reported to investors attending the Public-Private Partnerships (PPP) Summit that spending in the last third quarter was lower by P54.2 billion to P365.7 billion from the programmed expenditures of P419.9 billion.
Abad also said infrastructure and other capital outlay expenditures in the same quarter were lower by P15.3 billion against the target.
He said personnel services (PS) also went down to P14.3 billion while savings from interest expense for foreign and local debts narrowed by P6.3 billion and P5.1 billion, respectively.
Abad said the same timid spending is in effect for the last and fourth quarter.
“There’s a good prospect that the deficit level could be below our program because of prudent spending and improved collection of the Bureau of Internal Revenue,” Abad said at the sidelines of the PPP Summit dubbed as “Infrastructure Philippines 2010.”
He also said better tax collections may bring the government’s fourth quarter budget gap to narrow than programmed.
Revenue Commissioner Kim Jacinto-Henares reported good numbers for September and October, posting back-to-back surpluses for the previous months.
In October, BIR exceeded its target of P62.55 billion by hauling in revenues amounting P63.564 billion or up by P1.014 billion.
Year-on-year, the October collection was 15.74 percent above the actual revenues collected in the same period last year, which was P54.92 billion.
In September, the revenue agency, which collects 70 percent of the total tax revenues, similarly posted a surplus of P1.06 billion to P60.96 billion against target of P59.89 billion.
Henares attributed the surplus to the improved performances of its regional offices and the Large Taxpayers Service (LTS).
She said the two tax units “contributed significantly” to the BIR’s October performance.
It was the first time that the BIR posted back-to-back surpluses since Henares took over as chief tax collector.
But Henares said the November’s tax collection goal will be difficult to meet as it is 22 percent higher than last year’s collections.
“It will be very hard to achieve,” she said.
Henares said the BIR could collect only P830 billion this year, lower than the revised goal of P860 billion.
Finance Secretary Cesar V. Purisima nevertheless said the government is not just yet ready to abandon the P325 billion deficit goal in favour of a lower deficit cap.
He stressed that the government will maintain its deficit ceiling despite lower spending and better tax collection.
Purisima said the country’s third-quarter growth was still good and the economy may expand at a faster pace than the government’s goal of 6 to 7 percent this year.
In January to September, the country’s deficit amounted to P259.8 billion, or P13.9 billion. Dino Ng