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AS a
means to pump in more funds for public welfare and
agriculture projects while controlling government
spending, the government is aiming to hit a deficit of
P40 billion to P45 billion next year if a balanced
budget will not be possible, according to the National
Economic and Development Authority (Neda).
Neda
Acting Director General Augusto Santos said that in
order to meet the financial requirements of the
government, a deficit of 0.5 percent of the country’s
gross domestic product (GDP), which is equivalent to
around P40 billion to P45 billion, is possible in 2009.
The
government has officially moved its balanced budget
target from 2008 to 2010, the original target stated in
the first version of the Medium-Term Philippine
Development Plan (MTPDP).
For
2008, the government earlier announced that it aims to
hit a deficit of 1 percent of GDP, or around P75
billion.
“Depending on developments, we are eyeing a deficit of
0.5 percent of GDP. But if conditions improve, we will
push for a balanced budget by 2009,” Santos said in a
press conference in Pasig City on Wednesday.
Further,
he said that if the government lacks revenues, it is
also open to the option of borrowing funds.
As for
the debt mix, he said it depends on the performance of
the peso.
Santos
said at this time, when the peso is depreciating against
the US dollar, there is a greater possibility that the
government will opt to borrow abroad. A few months ago,
when the peso was strengthening against the dollar, he
said, it would have been a better option to borrow
domestically.
Among
the additional spending that the government is looking
into this year is the Department of Agriculture’s FIELDS
program— fertilizer; irrigation; education and training
of farmers and fisherfolks; loans; dryers and
postharvest facilities; and seeds of the high-yielding,
hybrid varieties—which is seen to make the Philippines
100-percent self-sufficient in rice by 2013.
The DA
is eyeing to spend P52 billion to P55 billion over a
period of five years for FIELDS, with bulk of spending
going to irrigation facilities and farm-to-market roads.
Santos
said around P7 billion of the amount was expected to be
spent this year through a supplemental budget. This,
however, will need approval from Congress, since the
amount is not part of the General Appropriations Act of
2008.
The Neda
chief said that if the supplemental budget is not
approved, the country can only rely on expanded
value-added tax (E-VAT) proceeds which are largely
allocated for public-welfare projects, such as
cash-transfer programs.
Santos
said the conditional cash-transfer program not only
reaches 1 percent of GDP, it is regarded as a common
means to help consumers cope with high food and oil
prices, even in other countries.
“If
[other countries] are doing it, probably we can do it
also. We just need to avoid leakages,” Santos said.
In terms
of E-VAT collection, Santos said the Cabinet has not
discussed the possibility of lifting it, but only that
it continues to be an option for the government, as well
as the lowering of VAT.
He said
that if the E-VAT is lifted, it will just benefit the
rich and will threaten the government’s spending for
social services and other similar programs, such as the
FIELDS program.
He said
lifting the E-VAT requires careful study because it has
to pass through Congress. Santos also warned that if the
E-VAT is lifted, the government funding for social as
well as infrastructure programs would be affected.
“We are
carefully studying the suspension of VAT payment,
particularly on oil, because that would mean less
revenues for government and less expenditure on social
and infrastructure sectors. There is a tradeoff
involved. While we may alleviate suffering in the medium
term, we may have difficulties in funding public
investment, but that is an option that we are looking
into,” Santos said in a statement.
In a
separate statement, Neda Deputy Director General
Margarita Songco said the government’s fiscal health is
key in sustaining the country’s growth momentum and
staying competitive.
Songco
said that with major fiscal adjustments and the timely
implementation of crucial infrastructure projects,
market sentiment on the Philippine economy has been
reversed, with stocks and reserves having risen
significantly. Improving investor confidence in the
country, she added, is manifested in the increasing
inflows of foreign direct and portfolio investments.
She said
the country’s deficit share to GDP has consistently been
surpassing annual targets. In 2007, for example, deficit
share to GDP was -0.19 percent, much lower than the -2
percent target.
Songco
attributed this partly to the lower-than-programmed
spending arising from the reenacted budgetary
allocations.
“Sustaining this growth will depend on the outcome of
continuing fiscal reforms and upgrading infrastructure
to boost productivity and raise the country’s
competitiveness,” Songco said. |
