Budget deficit to reach P160B next year - Recto

The government’s budget deficit could swell to as much as P160 billion in 2009 or two percent of gross domestic product (GDP), Socioeconomic Planning Secretary Ralph Recto said.

He stressed, however, that the government is still keeping its target to contain the deficit at P102 billion in 2009.

“What I’m saying is that the market will not punish us if the deficit is at two percent (of GDP),” Recto said.

Recto said the government would receive a positive reaction from the international financial if it is able to meet its commitment to contain the deficit at P102 billion for 2009.

The National Economic Development Authority (NEDA) chief earlier said the market already knows that the Philippines would not be able to balance the budget in 2010 given the need to spend more on infrastructure and social services.

However, Recto stressed that the government has not yet abandoned its balanced budget goal and would still try to erase the deficit in 2010, according to the revised schedule.

Earlier, Finance Secretary Margarito Teves admitted that the Philippines is finding it difficult to achieve a balanced budget by 2010, with the budget deficit expected to swell to P102 billion next year or P62 billion more than the original target of P40 billion.

However, Recto said having a deficit in 2009 and in 2010 would help cushion the economy from the negative impact of the global financial turmoil. He said the deficits would allow the government to spend more on infrastructure and social services.

The P102-billion programmed deficit for 2009 took into account higher expenditures of P1.467 trillion as the government plans to boost spending next year to help pump-prime the economy. This is above the original program of P1.433 trillion.

On the other hand, the government expects total revenues in 2009 to decline to P1.365 trillion from the original program of P1.393 trillion.

 The latest budget deficit projection of P102 billion is above the revised deficit forecasts for 2009 of P75 to P80 billion.

For this year, the government is still hoping to contain the budget deficit within the program of P75 billion.

The government incurred a budget deficit of P4.3 billion in November, a marked turnaround from the P54.1-billion surplus recorded in the same period last year.

The November budget gap brought the country’s fiscal position for the January to November period to a deficit of P66.7 billion.