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CEBU CITY, Philippines -- Despite optimism by finance officials, President Gloria Macapagal-Arroyo late Monday hinted that the country would not meet the balanced budget target this year.

Surging oil and food prices in the world market and the slowdown in the US economy could affect the government’s target of wiping out its budget deficit, the President said, and there is a need to "reassess" the target.

Arroyo said the original target date for balancing the budget was 2010.

"Remember the balanced budget target is 2010, but because our economic managers said that we're doing so well, so let's go for it in 2008," she told reporters late Monday here.

"But that was before oil went up, rice went up, and the US slowdown. So what I'm saying is that at this point in time, we are still working on a balanced budget but frontloaded. I keep on saying that we have to reassess it - the length and depth of the US recession and up to how much rice and oil will go up."

Arroyo expressed confidence that the international financial community would not rate the Philippines negatively even with the revised target, "as long as they see an increase in tax effort."

Earlier, Finance Undersecretary Gil Beltran said the national government could still achieve a balanced budget this year despite surging food prices.

The budget deficit for January this year reached P13.9 billion much less than the P29.7 billion fiscal gap reported in the same month last year.

Revenue collection also improved this year with the Bureau of Internal Revenue and the Bureau of Customs posting growth of 18.39 percent and 20.6 percent, respectively, compared with the nine percent they averaged in the same period last year.

But international credit rating agencies have raised fears that the rice subsidies could affect the Philippines' fiscal position. Most of the losses are expected to be absorbed by the National Food Administration, the government's rice importing agency.

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