Public sector fiscal deficit seen dropping to P206.6 billion in 2011

MANILA, Philippines - The government consolidated public sector fiscal position is projected to hit a narrower deficit of P206.6 billion next year, latest data from the Department of Finance (DOF) showed.

The projected P206.6 billion, which is equivalent to 2.3 percent of gross domestic product (GDP) is narrower than the P281.3 billion emerging consolidated public sector deficit projected for this year which is 3.4 percent of GDP, data also showed.

A narrower consolidated public sector deficit of P206.6 billion takes into account a narrower National Government budget deficit of P290 billion in 2011 compared to the projected P325 billion for the year.

It also takes into account a narrower consolidated deficit of P26.5 billion on the part of 14 monitored government agencies from the projected P61 billion deficit this year as the DOF implements various cost-cutting measures.

It also takes into consideration an improvement in the fiscal position of social security institutions such as the Social Security System (SSS), Government Service Insurance System (GSIS) and the Philippine Health Insurance Corp. (Philhealth).

These agencies are projected to hit a surplus of P46.4 billion in 2011 from P45.5 billion this year.

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 government-owned and controlled corporations, 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.

The country’s consolidated public sector fiscal position stood at a deficit of P109.9 billion in the first half of 2009, a marked turnaround from the P48.4-billion surplus registered in the same period in 2008, latest data from the department showed.