Deficit likely P310 B to P315 B in 2010 Lower than programmed P325-B ceiling

MANILA, Philippines – The government's budget deficit likely reached between P310 billion and P315 billion last year due to controlled spending, lower interest expense and higher revenue collections compared with 2009, an official said.

A government official, who declined to be identified because the fiscal data are not yet finalized, said the Aquino government was way below the reported P5 billion lower than programmed financing gap for 2010.

The finance department had set a budget deficit ceiling of P325 billion last year, which was equivalent to 3.9 percent of the country's output or gross domestic product (GDP).

The source said the lower deficit spending of the Aquino administration can be gleaned from the revenue collections report for 2010 to the Bureau of Treasury by the first two main tax agencies, the Bureau of Internal Revenue (BIR) and Bureau of Customs.

Finance Secretary Cesar V. Purisima earlier said that BIR and BoC’s collections last year grew at a faster pace than the country’s 2010 GDP.

The finance department is expected to announce the final budget deficit figure for 2010 next month.

But Purisima confirmed earlier that the government was below the P325 billion programmed deficit for 2010.

Budget and Management Secretary Florencio B. Abad had said the government’s spending last month was at a reasonable level, adding the total spending in December may help the government to end the year with a lower than the P325 billion budget deficit ceiling.

In January to November 2010, the government’s budget deficit stood at P269.8 billion, which was way below by P55.2 billion when compared to the full-year budget gap program.

In November, the government managed to register a small budget surplus of P482 million as revenue climbed 15.8 percent to P111.5 billion while spending rose following a decline in October.

Purisima also said that the government will keep its programmed P290 billion budget deficit for this year despite the lower than expected financing gap in 2010.

He is confident that the government will meet this year’s budget shortfall, which is equivalent to 3.2 percent of GDP.

“I believe in the coming years will be within the targets and we’re sticking to our targets,” Purisima said when asked on the possible revision on the government’s fiscal assumptions due to improved 2010 budget gap.

Several economists have already projected that the government may end the year with a lower than programmed budget gap after the Aquino administration implemented its “austerity measures.”

President Benigno Aquino’s administration plans to increase revenue and spending this year as it seeks investments in roads, bridges and railways to develop an economy, which the World Bank estimated that one in every four lives on a budget of less than $1.25 a day.