Lowering of macroeconomic indicators to cost government P89 billion

MANILA, Philippines - The government expects to lose a total of P89 billion in revenues along with the latest downward adjustments in macroeconomic indicators, Finance Secretary Margarito Teves said yesterday.

For one, Teves said that the downward revision in the economic growth forecast for the year to a low of 0.8 percent from a previous assumption of 3.7 percent also means lower revenues of P35 billion.

The Development Budget Coordinating Committee (DBCC), the interagency group that sets the country’s macroeconomic assumptions, lowered the government’s economic growth projection to a range of 0.8 percent to 1.8 percent from a previous forecast range of 3.1 percent to 4.1 percent.

The expected slowdown in the economy, brought about by the prolonged impact of the global financial turmoil is expected to affect businesses and consumer spending and consequently, cut into government’s tax revenues.

The expected decline in inflation to 2.5 percent from six percent this year is also expected to lower revenues by P36 billion, Teves also said.

The government’s latest average inflation projection for the year is a range of 2.5 percent to 4.5 percent from a previous projection of six percent to eight percent, taking into account easing oil prices.

Furthermore, Teves said the government expects lower revenues of P15 billion from the lower-than-program oil price assumption of $50 per barrel from the previous projection of $75 per barrel.

From the expected decline in interest rates to 4.5 percent from a previous projection of five percent, the government expects at least P3 billion in lower revenues, Teves said.

All these factors would translate to a total of P89 billion, Teves said as he appealed before Congressional leaders to pass crucial revenue measures when the next legislative session opens in July.