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23 June 2010

Philippine May budget deficit tops ceiling

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The Arroyo administration exceeded its first-half budget deficit ceiling last month on due to excessive spending, the Department of Finance said. In a briefing, Finance Secretary Margarito Teves said the government incurred a revenue shortfall of P30 billion in May, or 168 percent higher than the P11.4 billion in the same month last year.

This brought the five-month fiscal gap to P162.1 billion, exceeding the P145.2 billion ceiling for the first semester.

“The reason for the excessive spending for the first half was due to the frontloading activity made by the government which mainly went to the infrastructure, typhoon and El Niño relief programs and subsidies of the government for cheaper rice,” Teves said.

Government expenditures hit P140.2 billion in May, bringing the five-month tally to P662.1 billion, or P9.90 billion shy of the spending program for the first six months of the year.

“We are confident that though we have already breached the deficit cap for the first half, the government could still meet its revised deficit goal of P300 billion as the privatization program is expected to be realized during the second quarter,” Teves said.

The finance chief insisted that the P300-billion deficit ceiling was still within the 3.6-percent deficit-to-gross domestic product (GDP) ratio programmed for this year.

The Philippines’ economic managers earlier raised their growth target to a range of 5 percent to 6 percent, from the earlier 2.6 percent to 3.6 percent.

The higher GDP growth target led to an upward revision in the deficit ceiling.

Revenues at end-May reached P500 billion, or 9.6 percent below the P615.9-billion program.

Officials blamed the shortfall on the failed privatization program for the first quarter, the proceeds from which should have accounted for about half of the expected non-tax revenues of P61.4 billion. Non-tax revenues lagged at P21.6 billion for the first five months.


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