it's all about the money

10-mo deficit up 50% to P62B

by Jun Vallecera / Reporter

Business Mirror/Wednesday, 19 November 2008 01:

PUBLIC spending accelerated by more than 19 percent in October alone and a little over 10 percent in the first 10 months, allowing the budget deficit to rise by 50 percent from a year earlier to P62.3 billion, the Department of Finance (DOF) reported on Tuesday.

The escalation is positive proof the fiscal-stimulus package is still at work and making progress to help ensure growth averaging at least 4.1 percent in terms of the gross domestic product (GDP) this year, no matter the apprehension of the International Monetary Fund (IMF).

Senior officials, led by Treasury chief Roberto Tan and Finance Undersecretary Gil Beltran, told reporters the deficit in October alone widened from only P1.5 billion a year ago to P9 billion.

“The worries expressed by the IMF on our fiscal-stimulus package is misplaced. Our capital outlay, as you can see, continues to grow,” Beltran said.

According to Beltran, some 40 percent of total spending the past 10 months financed the construction of many infrastructure programs around the country.

“That should take care of our growth target this year,” he said of the public money seen to boost growth ranging from 4.1 percent to 4.8 percent this year.

The IMF previously noted that while the monetary sector has responded to the global financial turmoil with several liquidity-enhancing measures, the fiscal sector has not been as quick or innovative.

The IMF said domestic taxes have been weak through the year and must be monitored in the months ahead; and that the year’s tax effort, or tax collection as percent of GDP, should remain broadly unchanged from last year’s 14 percent.

The IMF also said the impact of higher current spending should be blunted by “lower capital expenditures” resulting from ‘weak absorptive capacity.’”

According to the DOF, the year’s 10-month revenues hit P972.6 billion, up 8.5 percent from last year’s P896 billion.

This was made possible by the 12-percent rise in collections by the Bureau of Internal Revenue (BIR) to P644.8 billion, and the 27-percent rise in collections by the Bureau of Customs; these partially offset the 10-percent and 37-percent contraction in the collections of the Bureau of Treasury and other offices of government
to P53.1 billion and P56.4 billion, respectively.

As the officials pointed out earlier, 10-month spending rose by 10.4 percent to P1.035 billion from year ago of only P937.4 billion.

Thus, the deficit totaled P62.3 billion in the first 10 months, or 50 percent higher than last year’s P41.5 billion.

Beltran, who spoke on behalf of Finance Secretary Margarito Teves who is in the United States on official mission, said the government “remains committed to raising the needed revenues to meet the requirements of our people amid these challenging times.”