First, the good news.
The government posted a "surplus" of P9.03 billion for the first four months of this year, Finance Secretary Jose Pardo reported yesterday to President Estrada.
Now, the bad news: despite government's revenue collection exceeding its expenditures from January to April, Pardo said the Economic Coordinating Council (ECC) has recommended that the President institute mandatory five percent cuts on the budgets of all executive departments.
"When you're ahead, you have to plan ahead... We're assuming the worse case scenario to ensure we're on top of the situation and we're not just reacting," he said, explaining the rationale behind the proposed cuts.
"Rather than impose cuts, we will leave this to the discretion of each department head to identify where to apply the cuts. These are not real cuts but just soft cuts, just in case," Pardo said, as he cautioned against being over-confident because of the surplus.
He said National Treasurer Leonor Briones informed the President Friday night that the national government posted a cash budget surplus of P9 billion for the month of April, with revenues of P58.06 billion well over expenditures of P49.03 billion.
Pardo told the weekly South Metro Journalists Breakfast Club forum yesterday that the cumulative performance of the national government from January to April showed an over-performance of P8.048 billion.
He said the total programmed deficit of the Estrada administration for the period was P21.331 billion while the actual deficit turned out to be only P13.283 billion.
"Over-performance in the sense that we underspent in April," Pardo explained, adding that the underspending was mainly in terms of delayed releases of the budget for programmed expenses.
Nonetheless, the finance secretary said the Estrada administration got the "seal of good housekeeping" from the just concluded review of first quarter performance of the country's economy conducted by the International Monetary Fund (IMF).
But he warned against complacency. Last Thursday, the ECC agreed that the government should try to effect a "fiscal consolidation" through possible budgetary cuts this year.
Pardo pointed out the government has committed to the IMF a deficit target of P62.5 billion from the P111 billion deficit inherited from the previous Ramos administration.
"Even if we're within the (deficit) target, we must take budgetary cuts. We must put some brakes by taking cuts ... not deeper than five percent," he said.
He said the President approved the ECC's recommendation and assigned him along with Budget Secretary Benjamin Diokno and Economic Planning Secretary Felipe Medalla to study how to implement these cuts without seriously impacting on the government's priority programs and projects for the poor.
"Our cash flows are okay, we can raise the money if we need (it). The economic fundamentals and the numbers will prove that, except for pockets of problems that somehow affect confidence (of investors)," he said, referring to the negative publicity generated by the ongoing crisis in the South.