The figures say it best.
The national government in 2007 posted a budget deficit of P9.4 billion ($230 million) -- the lowest in 10 years and a fraction of its original target.
But some analysts remain skeptical of the government?s achievement in significantly reducing last year?s budget gap -- bringing it down to its 1998 level -- and referred to it as a one-off performance.
?One should take this number in context of the P90 billion in assets that [the government] sold in 2007,? said Sin Beng Ong, an analyst with JP Morgan. ?If you take that out -- and one should, because those are nonrecurring items -- you have a budget deficit of closer to P100 billion.?
The national government -- as distinguished from the overall public sector -- had set a target of limiting the deficit in 2007 to P63 billion, 0.9 percent of the gross domestic product. But it easily beat the goal when it accelerated the sale of state equity stakes and kept spending in check to make up for weak tax collections last year.
?While [the national government] completed 2007 on a budget position far better than the P63 billion deficit target, 2008 brings a new set of challenges,? Finance Secretary Margarito Teves said in a press conference yesterday. ?Our continuing priority is to see to it that we generate the resources necessary to support higher levels of investments in infrastructure and social services.?
President Gloria Macapagal-Arroyo has vowed to balance the government books this year, for the first time since 1997, but that target looks increasingly difficult as the engines of last year?s performance -- asset sales and moderate expenditure --start to sputter.
The government has earmarked only P30 billion in privatization revenues this year and plans to accelerate infrastructure spending to shield its economy from a slowdown in the United States, its main trading partner.
To meet Arroyo?s balanced budget goal, the national government will instead have to rely on boosting tax collections, the Achilles Heel of the government?s fiscal program due to widespread tax evasion and corruption.
?If most of the heavy lifting has been done by these asset sales, that begs the question how viable the overall deficit position is going forward,? said Ong.
The government however maintained it would balance the budget this year.
The latest deficit was a result of P1.135 trillion in revenue collection and P1.144 trillion in expenditures, said the Department of Finance.
The yearend deficit of P9.4 billion was a swing from a surplus of P12.6 billion recorded in the 11 months through to November. Teves said the government spent more than what was programmed for December, mainly assisting state-owned firms to implement various social services.
In December alone, the government incurred a P22-billion deficit. Spending during the month reached P112.4 billion, compared with the programmed level of P99.67 billion.
Doubts have been raised over the government?s ability to balance its budget this year, given the collection shortfalls of the Bureau of Internal Revenue and Bureau of Customs last year.
The Bureau of Internal Revenue, which provides two-thirds of government revenue, missed its collection target last year by seven percent. The Bureau of Customs missed its goal by eight percent.
The two agencies have also expressed discomfort over their revenue collection targets this year, which they said were unrealistic.
Teves still expressed confidence that the government had the capability to meet this year?s fiscal goal. He said measures are in place to enhance tax collection. With a report from Reuters; edited by INQUIRER.net