The Philippines' budget deficit could widen to about 2 percent of gross domestic product (GDP) this year as revenue falls amid a slowing economy and government pump priming boosts spending, a cabinet official said on Monday.
The Southeast Asian country was estimated to have had a budget deficit of P75 billion ($1.6 billion) last year, or 1 percent of GDP. Official 2008 fiscal data is due for release later this month or in early March.
Budget Secretary Rolando Andaya said the government would be reviewing its macroeconomic assumptions, including the budget deficit, in coming weeks.
"Two percent of GDP, that's the maximum," Andaya told reporters when asked about the possible ceiling in the 2009 budget deficit to be discussed during the review.
Andaya said the adjusted fiscal shortfall level would be equivalent to P140 billion. But Finance Undersecretary Gil Beltran said the level would allow for a deficit of as much as P160 billion.
The government had set a budget deficit target of P102 billion this year, wider than last year mainly due to higher spending.
The government wants to spend more for social services and community infrastructure projects this year which it hopes would fuel economic activity and support growth.
Manila hopes growth would reach 3.7 to 4.7 percent this year from 4.6 percent in 2008, the lowest since 2002.
Andaya said the revenue target this year would likely be lowered as the economic slowdown meant companies would pay less income taxes.
The corporate income tax is also set to fall to 30 percent this year from 35 percent last year under a tax reform law.
The Philippines had set a revenue target of P1.238 trillion this year, 13.2 percent higher than a goal of P1.093 trillion in 2008.