THE GOVERNMENT’S budget deficit this year is expected to be below P200 billion, lower than previously estimated and just 1.8 percent of gross domestic product (GDP).
First Metro Investment Corp. and the University of Asia and the Pacific said in a research note, the December issue of Market Call, that the 2012 deficit would be smaller as a ratio of the domestic economy’s value than the previous year’s 2 percent.
According to the Bureau of the Treasury, the funding shortfall—which is addressed through borrowing—has reached P115.7 billion in the 10 months to October.
With two months to go, the amount incurred so far was not even half of the planned P279 billion.
“We expect a further decline in the deficit percentage in 2013 as tax collections gain traction with a faster moving economy and im proved tax administration,” FMIC and UA&P said.
Based on projections from the Department of Finance, the increased excise tax on tobacco products and alcoholic beverages would yield an additional P34 billion in the first year of implementation.
The decline of the budget deficit “also confirms our earlier projections that the debt-GDP ratio will fall to 48.8 percent by the end of this year and likely to be slightly lower in 2013,” FMIC and UA&P said.
“Thus, by next year, the country will have a lower debt ratio than Thailand, and it was already lower than Malaysia in 2011,” they added.
Finance Secretary Cesar V. Purisima had said that the debt-to-GDP ratio settled at 50.9 percent as of the end of 2011, the lowest level in the past 13 years or since 1998 when it was at 78.1 percent.
“With the Philippine economy bucking the trends abroad, supporting our constructive view since the beginning of the year, we are also more sanguine about the near-term and 2013,” FMIC and UA&P said.
They said that the economy’s fourth-quarter performance, despite a higher base in the year-ago period, “should be at least as good as the (January-September) average GDP growth of 6.5 percent.”