RP seen to incur consolidated public sector debt of P232.9 billion

MANILA, Philippines – The Philippines is expected to incur a consolidated public sector deficit of P232.953 billion this year on the back of the government’s swelling budget deficit, latest data from the Department of Finance (DOF) showed.

This means that the consolidated public sector position would be back in the red this year after posting three consecutive yearly surpluses from 2006 to 2008.

The latest public sector deficit projection took into account a revised budget deficit for 2009 of P250 billion from the original projection of P40 billion.

Originally, the government expects a public sector surplus of P45.4 billion for 2009 but this was under a government budget deficit projection of P40 billion.

Furthermore, under the revised public sector deficit projection of P232.953 billion, the government also expects government-owned and controlled corporations to incur a combined deficit of P63.2 billion from a previous deficit projection of P15.446 billion.

Finance officials said GOCCs are expected to post a bigger deficit this year due to the prolonged impact of the global financial turmoil.

In 2008, the country posted a consolidated public sector surplus of P32.3 billion in 2008, marking the third consecutive yearly surplus for the public sector.

The P32.3 billion surplus in 2008 was P6.142 billion higher than the P26.158 billion surplus posted in 2007.

The country’s consolidated public sector fiscal position is the combined budget deficits or surpluses of the national government and state-owned firms. These include GOCCs, local government units and government financial institutions.

It is closely monitored by local and foreign debt watchers as it is an indication of a country’s credit risk.

The government has been trying to impose prudent spending and financial discipline on state-owned agencies to improve the country’s fiscal position.

In 2007, the government had a public sector surplus of P26.158 billion, sustaining the surplus in 2006 of P5.33 billion. The 2006 surplus was the first since the 1997 Asian financial crisis, swinging from a deficit of P103.54 billion in 2005.

Prior to the 1997 crisis, the public sector recorded a surplus of P7.5 billion in 1996.