Government's decision to assume the debt obligation of the Metro Rail Transit Corp. (MRT) may increase the government's budget deficit this year by P1.2 billion, Finance Secretary Jose T. Pardo said yesterday.
Government is projecting a budget deficit of P62.5 billion this year.
Government will have to pay MRT's various creditors about $37 million this year.
"Based on the government's computation, the government would actually have to pay about $70 million a year for MRT's obligations," Pardo said.
Pardo, however, gave assurance that the increase in the deficit may still be offset if the riding capacity of the MRT improves.
He admitted that a technical committee has verified that the MRT continues to be underutilized.
"In fact, because of the underutilization of the MRT, the Economic Coordinating Committee has agreed on the need to cut and even further delay the purchase of additional train cars for MRT," Pardo said.
He said the government is supposed to buy an additional 44 cars as part of the expansion plan for the MRT. Unfortunately, Pardo said, the first 70 cars under the phase one of the MRT are not being used completely resulting in idle capacity.
The ECC then agreed to just purchase 24 new cars, but the purchase of the additional 24 cars will be postponed for one year to see if there is an improvement in the riding capacity of the MRT.
Government has to assume the debt obligations of the MRT due to its failure to generate enough revenues.