But financial markets barely flinched and analysts said there was little to celebrate as the government’s ability to manage its money had been tarnished by three deficit blowouts in 2002.
"The government has already lost its credibility for this year," said Jojo Gonzales, research head at Philippine Equity Partners. "It’s no big deal if they come in below that. It’ll be a big deal if they missed that."
Finance Secretary Jose Isidro Camacho, however, declined to comment on the deficit figures but disclosed that the Bureau of Internal Revenue collected a total of P39 billion in November. The Bureau of Customs, on the other hand, collected P8.4 billion.
"About P700-million worth of tariffs and duties that was supposed to come in November actually cleared on Dec. 2, so this did not count in BOC’s November collection," Camacho said.
The government, beset by an inefficient tax system and outright evasion, aims to limit the full-year shortfall to 5.6 percent of gross domestic product (GDP) or about P223 billion.
A senior government official said that a drive to boost the tax take, which makes up about 85 percent of state revenues, yielded results in November when the Bureau of Internal Revenue (BIR) beat its target for the first time this year.
The deficit for the first 11 months of the year probably came in at about P200 billion, the source said, 11-month budget with the November shortfall at around P13 billion to P15 billion.
Camacho said last week the tax office brought in about P38 billion in November, but the source indicated the amount collected was higher at P39.4 billion– handily beating the target of P37 billion.
But the ballooning deficit is a key concern for investors and a headache for the government. It has put pressure on the peso, forced the country to offer sweeter yields on its debt and diluted funding for vital development and anti-poverty projects.
Luz Lorenzo, an economist at ATR Kim Eng Securities, said she saw the government staying within its latest deficit target for this year and meeting its 2003 goal of a P202 billion shortfall.
"Next year I think we will see better revenue collection due to the different measures being undertaken by the BIR such as more electronic auditing, voluntary abatements and other programs," Lorenzo said.
The International Monetary Fund (IMF) expects the deficit to hit P230 billion next year, 15 percent higher than the official target, as politicians gear up for elections due by May 2004, a government source said over the weekend.
Concerns about the deficit prompted Standard & Poor’s and Fitch Ratings to cut their outlooks on the country to negative.
Moody’s Investors Service, which sent a team to survey the economy this month, said it was premature to talk about a ratings downgrade but that its stable outlook may be reviewed.
"The overnight rates will be steady in the first half if we follow the 2003 economic targets, although the T-bills will inch up a little because of the higher borrowings," he told reporters.
The overnight borrowing rate is at a decade low of seven percent, while the lending rate for banks is 9.25 percent.
"This is nothing new for the market, which has factored in the fact that peso stability remains the key objective for the central bank," said Charlie Lay, an economist at 4Cast Ltd.