BEIJING - China's fiscal deficit is set to hit a record high this year, as the global crisis shrinks revenues while forcing the government to spend more on pump-priming, local media said.
The finance ministry has foreseen a deficit of 950 billion yuan ($139 billion) in its draft budget for 2009, the China Business newspaper reported over the weekend.
The figure is nine times higher than a deficit of 111 billion yuan in 2008, and it accounts for about three percent of the overall economy, which is an internationally recognised alarm level, the paper said.
"It's absolutely possible," said Wang Qian, an economist with JP Morgan in Hong Kong, when asked if the deficit sounded realistic.
"This year, there's nothing surprising in a fiscal deficit of three percent of the economy," she said.
China Business said the deficit will result from fiscal spending in 2009 topping 7.6 trillion yuan, up 22.1 percent from 2008, as the government plans to raise investment in 15 sectors including housing and transportation.
Meanwhile, the finance ministry forecasts fiscal revenue to reach 6.6 trillion yuan this year, as the growth rate is expected to slow sharply from last year's 19.5 percent to eight percent this year.
China unveiled a massive four-trillion-yuan spending programme in late 2008 to revive the economy and this year has issued or is expected to soon introduce more incentives for 10 sectors such as autos and petrochemicals.
The 2009 budget, with is record-breaking deficit, will be up for a vote at China's parliament, the National People's Congress, which opens next week.
No budget has ever been passed by anything but a crushing majority by the nation's 3,000-member rubberstamp legislature.