MANILA, Philippines - The government is confident that it will be able to contain its budget deficit target at P293.2 billion or 3.5 percent of gross domestic product (GDP) this year despite breaching the first quarter budget gap ceiling.
Budget Secretary Joaquin Lagonera said that while disbursements in the first quarter of the year amounted to P400 billion or P22.8 billion above the original target of P377.2 billion, it represents only 25 percent or about a quarter of the total budget for the year of P1.58 trillion.
“The Department of Budget and Management (DBM) will closely monitor releases for the upcoming quarters to ensure that the country’s deficit for the year will be within target,” Lagonera said.
The government’s budget deficit hit P134.2 billion in the first quarter of the year because of higher spending. The first quarter budget gap is above the program of P110.9 billion for the period and the P119.7 billion recorded in the same period last year.
Lagonera said that the greater-than programmed first quarter disbursements may be attributed to the early passage of the budget this year and the faster spending by agencies as a result of the rigorous implementation of the “use it or lose it policy” and the election ban.
“We did not anticipate the early passage of the budget in February this year because in the immediate past years, the budget became effective either in March or April,” Lagonera noted.
Furthermore, he said there was a significant improvement in the absorptive capacity of implementing agencies in anticipation of the election ban on infrastructure projects.
Data from the DBM showed that the bulk of the increase in spending during the first quarter went to infrastructure projects. Spending increased by as much as P20.3 billion to P52.5 billion from the programmed P32.1 billion.
Citigroup maintains RP’s budget deficit forecast
US-based Citigroup said yesterday that it is maintaining its 2010 budget deficit forecast of P318 billion for the Philippines, or 3.8 percent of gross domestic product (GDP).
In a report on the Philippines released yesterday, Citigroup said the government’s “hefty first quarter slippage only heightens slippage risk of the budget deficit target of P293 billion.”
In its report, Citigroup said the first quarter deficit figures were unexpected given the improved tax revenues in March.
In March, revenues amounted to P63.9 billion against the P52.6 billion recorded a year ago.
Citigroup warned that the government may have to freeze some of the non-interest expenditures in the succeeding quarters after the May elections if revenues including this year’s P30 billion in privatization proceeds fail to improve.