MANILA, Philippines (UPDATE) - The government failed to meet its budget deficit target for the first quarter of 2010 as revenues fell below the programmed collection and spending went over the limit.
Despite this, Finance Secretary Margarito Teves said the full-year deficit goal would be maintained.
The budget shortfall hit P63.9 billion in March, bringing the total for the first 3 months to P134.2 billion, higher than the programmed ceiling of P110.94 billion.
January-to-March collections amounted to P265.8 billion, slightly lower than the target of P266.3 billion, but 12.9% higher than the P235.4 billion booked for the same period in 2009.
The Philippines' 2 main tax agencies were able to meet their target collections, data from the Finance Department showed. However, these were not enough to offset lackluster collections of the Bureau of Treasury and other government offices.
The Bureau of Internal Revenue, which accounts for two-thirds of state revenues, generated P173.9 billion for the first quarter of the year, better than its P157.7-billion target and 12.4% higher than last year's collection of P154.8 billion.
On the other hand, the Bureau of Customs was able to raise P60.6 billion, up 40.5% from last year's P43.1 billion, and higher than the programmed collection of P55.1 billion.
Collections by the Treasury and other offices were 17% and 52% lower than target, respectively.
Government disbursements, meanwhile, reached P400 billion, above the P377.2-billion program, and 12.7% more than what was spent last year.
This was partly because of frontloading of public spending on infrastructure projects ahead of a ban on new state contracts before the May 10 presidential elections.
Keep 2010 gap goal
Teves said the government was keeping its full-year deficit goal of P293.2 billion or 3.5% of gross domestic product (GDP) despite the higher-than-targeted deficit in the first 3 months.
"No plan (to raise 2010 deficit target)," he noted.
Economists, for their part, were optimistic that the Philippines could meet its 2010 gap goal on the back of economic recovery.
"Assuming that the revenue continues to meet the targets, they still have a shot maybe to meet their annual deficit target," said Action Economics (Singapore) economist David Cohen.
"The economy, like the rest of the region, seems to be on track. The growth is moderate and now seems to be supported by the general global pick up so that should be positive for their budget," he added.
Simon Wong, economist at Standard Chartered Bank in Hong Kong, said the country's deficit may come in at P270 billion, below the ceiling, as "fiscal consolidation will again be on the agenda of the new government."
"For the second half of the year, the government will tone down its fiscal spending because the economy has picked up," he noted.
The government posted a record budget deficit of P298.5 billion, or 3.9% of GDP, in 2009 as it accelerated spending and the global downturn squeezed revenues.
Sell state assets
To shore up collections this year, Teves said they were hard-pressed in privatizing state assets worth P12 billion.
He said the government may sell a commercial/industrial complex for up to P9 billion, and a state property in Fujimi, Japan for P3 billion. - Judith Balea, abs-cbnNEWS.com, with Reuters