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August 27, 2007
Deficit target likely to improve

The Philippines' budget deficit for the full year may come in at just over 50 billion pesos ($1.07 billion), better than a target of 63 billion pesos, according to the latest assessment by the Department of Finance.

Documents from the department, issued internally last week and seen by reporters on Monday, indicated the government could raise 1.09 trillion pesos in total tax revenue for the full year, exceeding the 1.0 trillion peso target.

The department said the government had already reduced interest payments on debt by 30 billion pesos against forecast due to the peso's appreciation against the dollar in the first half of the year and lower local interest rates.

For the full year, these interest savings are expected to hit 40 billion pesos.

The government is also banking on the sale of more state-owned assets to fill the gap in case collection agencies fail to recover revenue shortfalls.

For instance, the government hopes to raise an additional 37 billion pesos from the sale of a 40 percent stake in PNOC-Energy Development Corp and another 10 billion from the sale of its 10 percent stake in utility Manila Electric Co.

However, economists have said turbulence on global markets could trip up Manila's plans to raise the targeted amount from the sale of government assets. Reuters reports

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