MANILA, Philippines - The Department of Finance has raised this year's budget deficit ceiling by about P7 billion in anticipation of increased public spending to meet higher economic growth targets.
Finance Secretary Margarito Teves said the government is now looking at a deficit of P300 billion for 2010, higher than the P293.2-billion original target ceiling.
Teves, however, noted that the new target is still in line with the deficit-to-gross domestic product (GDP) ratio goal of 3.6%.
"We are always mindful that the government needs to maintain fiscal discipline and that is the reason why we are maintaining the 3.6% deficit-to-GDP for 2010," he said.
The P300-billion deficit figure is just P1.5 billion shy of the actual 2009 shortfall amounting to P298.5 billion, and if reached, will be a record high for the country.
The Philippine economy grew by a surprising 7.3% in the first quarter, the highest since the 7.5% rise in the second quarter of 2007.
This led the government to increase the full-year economic growth target to a range of 5% to 6% from the previous 2.6% to 3.6%.
While faster growth should boost tax revenues, the larger deficit goal of the government shows finance officials do not expect those gains to offset spending.