In a statement, Malacañang said the 2004 estimate was based on the deficit of P160.2 billion posted in the 11 months to November, which was P21.7 billion below the target for that period.
Finance Secretary Juanita Amatong said the government is projecting a budget deficit of P193.3 billion in 2005.
Controlling the growing budget deficit is one of the biggest concerns for the government which is struggling to raise enough revenues while still providing the services and infrastructure needed to develop this impoverished country.
President Arroyo has asked Congress to pass a set of measures to raise at least P80 billion more in revenues annually to avoid a possible debt default in three years.
International credit agencies have warned that the Philippines faces a sovereign ratings downgrade if Congress and the government fail to act.
However, only one of the eight measures, an increase in the excise tax on tobacco and liquor products, has been passed ahead of the Christmas recess.
Amatong said this year’s performance was mainly due to the improvement in revenue collections as the government just barely managed to stay within its spending program.
She added that should the government succeeds in keeping its deficit within target, it will be the first positive signal to credit rating agencies that the Philippines is seriously addressing its fiscal problems.
The deficit is the most-watched economic indicator as credit rating agencies and the country’s foreign creditors examine the government’s fiscal performance for any indication of looming crisis.
For next year, however, Amatong admitted that the government would be going on a slower trajectory towards balancing its budget which would reflect for the first time the debts that have been absorbed from the National Power Corp (Napocor).
The added burden from Napocor’s debts will create a wider gap in the national budget from the original P184.5 billion target deficit to P193.3 billion in 2005.
The 2005 deficit was revised by the Development Budget Coordination Committee (DBCC) to reflect the impact of the National Government’s decision to absorb an initial P200 billion of Napocor’s debts. — Des Ferriols