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August 20, 2008

Philippines’ July budget deficit soars
The Philippines’ budget deficit shot up ten-fold last month due to the absence of state asset sales during the period, reported local daily The Manila Times on Wednesday.

Philippine Department of Finance data showed the government incurred a budget deficit of 15.4 billion peso in July from the 1.6-billion peso surplus recorded in the same month last year. In a briefing, Finance Sec. Margarito Teves said the wider deficit is due to the 17.1-billion peso revenue windfall last year from the sale of government’s stake in Philippine National Oil Co.-Energy Development Corp. (EDC).

Despite the huge letdown, Teves said the government’s two main revenue-generating agencies—the Bureaus of Internal Revenue (BIR) and of Customs—enjoyed increases of 8 percent and 25 percent in collections year-on-year.

BIR Deputy Commissioner Nelso Aspe said the agency delivered less in July due to the implementation of the withholding tax exemption for minimum wage earners.

Revenues from other offices including proceeds from state asset sales fell 70 percent to 5.8 billion peso from 19.1 billion peso last year.

Public spending last month, however, grew 14 percent to 117 billion peso from 102 billion peso in the same period last year.

Budget Secretary Rolando Andaya Jr. said the higher price of raw materials has led to the slower pace of disbursement for infras-tructure, adding some contractors have asked for higher contract prices for their projects.

With higher inflation this year, the government will come up with a formula to help contractors cope with higher prices of steel and other raw materials, the Department of Budget and Management chief said.

Total spending in the first seven months rose 8 percent to 705 billion peso from 654 billion peso last year.

“We remain committed to accelerating spending for the poor to help them cope with the higher cost of food and oil. But we would also endeavor to keep the budget deficit at not more than 75 billion peso,” Teves said.

Even with the higher July deficit, the first seven-month fiscal gap eased by 15 percent to 33.4 billion peso from 39.4 billion peso last year. BIR collections reached 453 billion peso while Customs brought in 142 billion peso.

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