Gov’t sets out to trim budget gap in Q2, Q3

The government hopes to trim the budget deficit in the second and third quarters of the year, before ramping up spending in the fourth quarter.

Under the 2013 fiscal program released by the Department of Finance, the government hopes to cap the budget deficit in the second quarter at P10.78 billion and at P59.8 billion for the third quarter—lower than the P66.48 billion reported for the first three months of the year.

However, the deficit ceiling set for the fourth quarter has been set at P93.58 billion.

The bigger deficit cap in the last three months of the year was made on the assumption that public spending, especially for big-ticket projects like infrastructure, would rise substantially.

The deficit targets for the remaining quarters of the year take into account the projected quarterly revenue collections of P482.22 billion, P434.22 billion, and P450.59 billion, respectively.

Also, the quarterly expenditure targets were set at P493 billion, P494 billion and P544.17 billion.

For the full year, the government aims to keep its budget deficit at or below P238 billion, which is equivalent to 2 percent of the projected gross domestic product of the country in 2013.

The deficit limit for this year is lower by about 2 percent than the actual budget gap of P242.83 billion recorded last year.

Finance Secretary Cesar Purisima told reporters last week that, by keeping the deficit for the full year at 2 percent of GDP, the government would be able to continue to trim the ratio of its outstanding debt to the country’s GDP.

“If we continue to keep our deficit small and as the economy rises further, we would need to borrow less and, therefore, the debt-to-GDP ratio would fall further,” he said.

After hitting a peak of 74 percent in 2004, the debt-to-GDP ratio fell consistently over the years until it hit only about 50 percent last year.

Economic officials said the latest debt-to-GDP ratio of the Philippines was already within the limits prescribed by international standards.

The decline in the debt burden is one of the things credited for helping the country attain an investments grade.

Last March 27, Fitch Ratings gave the Philippines its first investment grade, raising its credit standing by a notch from BB+ to BBB-, which is the minimum investment grade.

On May 2, Standard & Poor’s undertook a similar move.