Admin to keep P300-B deficit cap

MANILA, Philippines - Economic managers may keep this year’s P300-billion budget deficit cap when they review the country’s growth targets due to recent international developments, Budget Secretary Florencio Abad said yesterday.

Abad said the revenue-generating agencies like the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) had managed to increase their collections as the government implements fiscal reforms.

“All revenue generating agencies registered a 15-percent increase in revenues that occurred with prudent spending. We will stay within the deficit cap,” Abad said. “That cap will remain P300 billion. “Our concern really is how to ramp up expenditure,” he added.

When asked if the budget shortfall target would be changed, Abad replied “not likely.”

The government posted a deficit of P34.49 billion as of August, way below the P228.1 billion posted in the same period last year. For the month of August alone, the government recorded a surplus of P9.22 billion.

Treasury data showed that revenue collections hit P912.75 billion for January to August.

While the revenue for the eight-month period was higher than last year’s P802.82 billion, it was short of the 2011 program of P1.04 trillion.

Actual collections were recorded at P619.71 billion for BIR and P171.992 billion for BOC, posting a year-on-year growth of 13.42 percent and 0.74 percent, respectively.

Meanwhile, Abad expressed optimisim that the Philippines has good chances of securing a credit upgrade. He said the credit raters seem to be satisfied with the way they are implementing fiscal reforms.

“From the way they were fielding their questions, they seem very satisfied with the developments both in terms of the country’s monetary policy and fiscal consolidation,” he said. “There is a good chance that we may be able to get that investment grade.”

Abad, Finance Secretary Cesar Purisima and Bangko Sentral Governor Amando M. Tetangco Jr. met with officials of credit rating agencies Standard & Poor’s, Moody’s Investors Service and Fitch Ratings in the US last week.

“We were told they are going to make an evaluation towards the end of the year. We hope to get that upgrade sometime early next year,” Abad said.

A credit upgrade would mean lower interests for the government’s borrowings.

“We’re likely to save as much as P30 billion because of lower interest payments,” Abad said, referring to previous rating upgrades of the Philippines.

The Philippines’ credit rating was upgraded to Ba2 by Moody’s Investors Service last June. Standard & Poor’s increased the country’s rating to BB in November 2010 while Fitch upgraded the same to BB+ in June.

The Philippines’ debt ratings, however, are still below the investment grade set by the three credit raters.