Government vows to do all to contain budget deficit

The Philippines, faced with risks of further economic slowdown following attacks on the United States, has vowed to do all it could to keep the budget deficit within its target of P145 billion.

"Personally, I think anything that will be beyond P145 billion would be worrisome... it’s the perception that it creates, I think, is the one that’s more important," Budget Secretary Emilia Boncodin said in a television interview on Friday.

Boncodin was responding to a question on whether she thought the market would tolerate a slight overshoot of its target.

"I would rather that we stay within the target... we are going to do everything we can to make sure that it is within the target deficit."

The Philippines announced on Thursday its budget deficit stood at P99.527 billion for the first eight months of the year, above the forecast level of P96.644 billion due to higher spendings on rural development projects.

Economic managers, however, brushed aside worries, stressing that overall expenditures were still within the programmed level.

The Philippines is grappling with a budget deficit problem, mainly due to shortfalls in revenue collections. It posted a budget deficit of P136.11 billion in 2000.

"This year is crucial for the new administration since it’s their first fiscal year. Prudence is one of their priority list," said Abacus Securities economist Jun Neri.

Gloria Arroyo was installed as the new president in January after a popular revolt ousted former leader Joseph Estrada who is facing charges of economic plunder.

"We’re looking at close to P150 billion (budget deficit for 2001), slightly higher

than what the government is eyeing," ING Barings economist Joey Cuyegkeng said.

"But with the way the government is conducting its fiscal management, there’s more than an even chance it can achieve the targets."

Asked about the impact of the US battle against terrorism, Cuyegkeng said: "There could be events that may trigger higher spending. But we don’t know how weak the economy will be with the external problems. It depends on how we will be hit."

National Security Adviser Roilo Golez said the Philippines was not considering sending its troops to help US forces, but might offer the use of former US air and naval bases here.

Volatility in global financial markets after the Sept. 11 attacks have prompted the state-owned National Power Corp to delay its scheduled $400 million bond roadshow next week.

"The postponement is on account of the terror attack. We don’t expect it to be a prolonged one... postponed does not mean cancelled," National Treasurer Sergio Edeza told Reuters.

The Philippines filed with the US Securities and Exchange Commission overnight to raise shelf registration of debt securities and warrants by $800 million, but Edeza clarified the move was merely a refiling of their request in July.

In July, the government asked US regulators for permission to sell up to $800 million in securities and warrants periodically, in addition to $400 million of previously registered but unsold debt securities.

Finance Secretary Jose Camacho also said the government might cancel its global campaign next month to restore investors’ confidence in the country.