MANILA, Philippines—Although it posted a budget surplus in January, the government expects to incur a deficit of P112 billion in the first quarter, as efforts to shore up revenue collection are not expected to take full effect until the latter part of the year.
The Department of Finance has set the deficit ceiling for the period at P112 billion, according to this year’s fiscal program. This will result from the programmed expenditure of P431 billion and the expected revenue of only P319 billion for the first quarter.
The first quarter is seen to register the lowest amount of revenues compared with the three other quarters. Revenues are likely to rise in the succeeding quarters given the efforts to go after tax cheats and the government’s resolve to strictly implement the country’s tax laws.
Under the 2011 fiscal program, revenues in the second, third, and fourth quarters are seen to reach P367 billion, P354 billion and P370 billion, respectively. Expenditures are seen hitting P407 billion, P437 billion, P436 billion in the same periods, respectively.
The budget gaps are seen to settle at P40 billion, 82 billion, and P66 billion in the second, third, and fourth quarters, much lower than the first-quarter figure.
For the entire year, the deficit is seen to reach P300 billion, lower than the actual budget gap of P314 billion last year.
The government had targeted to achieve a balanced budget position in 2008. However, it had to back-track given the global economic turmoil then.
Finance officials said the global crisis forced the government to spend more on infrastructure and social services. Without the pump-priming initiatives, they said, the Philippines could have succumbed to recession in 2009.
Now that the global crisis is over, the Aquino administration’s economic team said the government had started implementing a deficit-reduction plan.
Under the plan, the deficit-to-GDP (gross domestic product) will be reduced to 3.2 percent this year and to less than 3 percent by the end of President Aquino’s term.
Last year, the deficit-to-GDP ratio stood at 3.7 percent.
The unfavorable fiscal situation has been cited by credit-rating agencies as one of the reasons why the country’s credit scores remained below investment grade.
They said the country’s outstanding debt, estimated at P4.7 trillion, is higher compared with those of similarly rated economies.
The rising debt level was blamed on the yearly deficits incurred by the government.