"At worst, we could go beyond our budget deficit target by P10 billion," Finance Secretary Jose Isidro Camacho said even as he added that government is still sticking to its original budget deficit target of P145 billion this year.
Camacho confirmed that the inter-agency Development Budget and Coordinating Council (DBCC) downscaled the macro-economic targets for 2002 and trimmed the BIR’s collection target following an adjustment in this year’s growth targets.
This year’s gross domestic product or GDP was lowered to 3.3-3.8 percent from 3.8-4.2 percent, given the slowdown in the economies of the country’s two biggest trading partners, the US and Japan.
As a result, the GDP for 2002 was also lowered to 4.3-4.8 percent while gross national product or GNP was trimmed from 4.8-5.3 percent to 4.6-5.1 percent.
Exports for next year was also downscaled to six percent from the original target of 10.3 percent while imports was also lowered from 14 percent to seven percent.
The DBCC also revised inflation at five to six percent next year, and the 91-day Treasury bill rate at 10-11 percent while the foreign exchange rate was pegged at P50 to the US dollar.
"We are constantly reviewing our targets in light of various internal and external developments and our latest consolidation indicates that we will be able to meet our P145 billion deficit target," Camacho said.
Camacho said the deficit could still be attained with an aggressive privatization effort and additional savings during the remainder of the year.
"Whatever happens, we will push for the privatization of government’s stake in the Meralco (Manila Electric Co.). We are talking to the Privatization Management Office to look for more assets that can be disposed off," Camacho said.
He said that despite the BIR’s poor performance, which contributes about 80 percent of government’s total revenue collection, government gained in other areas.
"We had some offsetting gains brought in by non-tax revenues in the first half of the year and we project that we will be able to earn P10.7 billion above target in this area," Camacho said.
To offset the reduction in the BIR’s collection goal, DBCC has pushed for a P4-billion increase in the P19-billion revenue goal of the Bureau of Treasury, as well as a P3-billion increase in the state’s P7-billion privatization scheme.
Moreover, a P4-billion cut in expenditures and some P6 billion in savings in interest payments are also expected to offset lower tax collection.
In another development, Camacho said government will indefinitely postpone its plan to launch a no-deal roadshow this month and will instead proceed first with the $500-million global bond offering also scheduled by month’s end.
"It’s rather awkward to do both at the same time, with two different banks handling the roadshow and the offering," Camacho said.
He also denied talks that the sole bookrunner for the bond offering is asking for a renegotiation of the terms of the offering in the wake of the recent widening of spreads of emerging markets following the Argentinian crisis.
"There is no renegotiation, and there is no plan to change the terms of the offering," Camacho said.
Credit Suisse First Boston (CFSB) was appointed as "sole bookrunner" for the bond offering, proceeds of which will help plug government’s budget deficit. As bookrunner, Credit Suisse will singly arrange and negotiate the terms for the loan.
CFSB is also expected to talk to other investment banks to solicit their participation in the deal, and if the funds loaned by third parties fall short of the requirement, CFSB will provide the remainder of the loan.
It will be the first bond offering under the Arroyo administration.