According to the Department of Budget and Management, the deficit for the entire year is likely to amount to 2.3 percent of the country’s gross domestic product (GDP), or about P246 billion lower than the ceiling of 2.6 percent.
“The outlook on the deficit is that it will be 2.3 percent of GDP… To a certain extent, it will be due to slightly lower than expected expenditures,” Budget Secretary Florencio Abad told reporters.
Abad said a strong revenue collection would likely help the country’s budget deficit this year below the ceiling.
Although it is below the ceiling set for the year, the projected deficit for the year is 25 percent higher than the P197 billion incurred last year.
The projected double-digit expansion in the budget gap this year is attributed to government efforts to spend more on development programs, such as infrastructure projects and food subsidies for selected poor families.
“The pace [of spending this year compared to last year’s rate] is faster, especially in the area of infrastructure, which covers roads, flood-control projects and others,” Abad said.
The government said the projected increase in the deficit remained manageable and still within prudent levels.
The higher budget gap was due to higher government spending, which officials said was necessary in ensuring the growth of the Philippine economy.
Economic pump-priming is needed given the impact on the country’s export earnings of the crisis in advanced economies in the West.
Officials said the comfortable budget deficit level helped the country obtain credit ratings upgrade.
The country’s current ratings from the three major international credit ratings agencies stand at one notch below investment grade.
The government hopes that at least one of the three major credit firms will raise the country’s rating to investment grade next year.