2009 budget deficit seen at P290 billion

MANILA, Philippines - The government said yesterday that the estimated budget deficit for 2009 is P290 billion, above the P250 billion official full-year ceiling but slightly below an earlier estimate of P300 billion.

“It will likely hit P290 billion,” National Treasurer Roberto Tan told reporters yesterday amid reports that last year’s deficit likely hit P293 billion.

Fiscal authorities denied this as they maintained that the estimate is still P290 billion.

Finance Undersecretary Gil Beltran said the 2009 budget deficit position was pulled up by the better-than-expected collections of the Bureau of Internal Revenue (BIR) in December alone when the agency collected P63 billion or P3 billion higher than the target for the month of P60 billion.

As of end-November 2009, the government’s budget deficit has already swelled to P272.5 billion, more than four times the P66.7 billion incurred in the same period last year mainly because of weak revenues.

 During the eleven-month period, revenues reached only a total of P1.021 trillion, down by 5.5 percent from the comparative period last year of P1.081 trillion while expenditures rose by 12.7 percent to P1.294 trillion from P1.148 trillion disbursed in the same period last year.

Finance Secretary Margarito Teves is expected to announce the actual full-year budget deficit for 2009 in a briefing next month.

For 2010, the government is looking at a budget deficit of P293 billion or higher than the initial estimate of P233.4 billion because of the so-called revenue-eroding measures approved by Congress.

According to estimates made by the Department of Finance, P60 to P65 billion are lost yearly because of these so-called revenue-eroding measures.

These measures include the lowering of the corporate income tax rate to 30 percent from 35 percent which is expected to translate to revenue losses of P15 to P20 billion yearly.

Another measure is the Minimum Wage Law which exempts minimum wage earners from income taxes. The government expects to incur losses of roughly P26 billion a year from this measure.

The National Tourism Act, meanwhile, is estimated to translate to P3 billion in foregone revenues.

Another measure, the imposition of franchise tax on power transmission in lieu of all national and local taxes, is expected to leave a dent on state coffers amounting to P9 billion a year.

The so-called Personal Equity Retirement Account (PERA) Act of 2008, a tax-free pension scheme for retiring individuals, is estimated to cost the government P7 billion yearly.

To raise funds, the government is banking on the privatization of state-owned assets including the P13 billion Food Terminals Inc. property in Taguig and its 60 percent stake in Philippine National Oil Company-Exploration Corp. estimated at roughly P15 billion. Thus, this year’s privatization program has been raised to P30 billion from P12.5 billion previously.