Government to trim 2010 budget deficit target

MANILA, Philippines - The government’s revised budget deficit ceiling of P293 billion for the year may be revised downward because of the 0.9 percent economic growth recorded last year, Acting Socioeconomic Planning Secretary Augusto Santos said over the weekend.

Santos said the National Economic and Development Authority (NEDA) would recommend a downward revision in the 2010 budget gap because of the performance of the economy last year. 

“The 2010 deficit may be lowered because of the good performance of the 2009 GDP (gross domestic product). The economic managers will meet and we can discuss the 2010 targets,” Santos said. 

The government has set a budget deficit of P293 billion for 2010, revised from an earlier estimate of P233.4 billion on account of the lingering impact of the global financial turmoil and anemic revenues. As of end-November 2009, the government’s budget deficit stood at P272 billion.

The economy, as measured by GDP expanded by 0.9 percent last year, within the official growth forecast range of 0.8 percent to 1.8 percent for 2009, the National Statistical Coordination Board (NSCB) said on Thursday.

While within the government’s target, the 0.9 percent is the slowest economic growth recorded since 1998 when GDP contracted by 0.6 percent, a year after the  Asian financial crisis hit the country. Last year’s growth also reflected a marked slowdown from the 3.8 percent recorded in 2008.

However, in the fourth quarter of 2009, the economy accelerated to its fastest pace during the year, growing by 1.8 percent compared to

a revised 0.4 percent in the third quarter, data from the NSCB also showed. In the first three months of 2009, the economy contracted

by 1.3 percent but recovered in the second quarter with a 1.5 percent growth.

On a seasonally adjusted basis, the economy grew by by 0.9 percent in October to December from the previous quarter.

With the performance of the economy in 2009, Santos said GDP growth this year may hit the higher end of the official forecast range for 2010 of 2.6 percent to 3.6 percent. 

The government would continue with stimulus spending but at a reduced level from last year.