MANILA, Philippines—The government’s budget deficit likely fell below the target last year due to savings from lower debt servicing costs and spending constraints following the scrutiny of lawmakers’ discretionary funds.
Likewise, the shortfall between government revenue and spending for this year might also fall below the desired level this year even as the administration ramps up spending for reconstruction efforts in the Visayas, Dutch financial giant ING said.
“Spending was also moderated as a result of the pork barrel scam and the Supreme Court’s ruling of its unconstitutionality and questions against the government’s Disbursement Accelerated Program (DAP),” ING economist Joey Cuyegkeng said.
Cuyegkeng added in a commentary that savings on interest payments—a result of the country’s three investment-grade ratings last year—would have eased the burden of debt on state coffers.
The bank’s comments come ahead of the release of the government’s fiscal performance for the full year of 2013. The finance department earlier set a budget deficit target of P238 billion.
ING said the shortfall likely settled at P230 billion, which was still broadly in line with the government’s deficit spending goal of about 2 percent of gross domestic product (GDP).
ING said the government’s spending slowed sharply in October and November of last year at the height of issues over anomalies in the use of the priority development assistance fund (PDAF) or “pork barrel” of some lawmakers. The PDAF was later declared unconstitutional by the Supreme Court.
“The requirements for the rehabilitation and reconstruction of typhoon-devastated areas are responsible for the rebound in spending for December,” Cuyegkeng said.
The fiscal deficit target for 2014 was P266 billion, ING pointed out. “We expect a mild underperformance equivalent to 2.1 percent of GDP,” Cuyegkeng said, adding that the availability of liquidity in the financial system “would easily finance the (government’s) additional funding need.”
Meanwhile, ING likewise said the GDP growth for the year would be within the government’s target of 6.5 to 7.5 percent, supported largely by remittances from overseas Filipinos, whose remittances rose 6.4 percent to $22.8 billion last year, accounting for 8.4 percent of GDP.