Public sector deficit declined in 2012

The country’s consolidated public sector deficit (CPSD) stood at P163.3 billion in 2012, down 7 percent from the P175.1 billion recorded the previous year, according to the Department of Finance.

CPSD refers to the combined budget deficits of the national government, government owned and controlled corporations, government-owned banks and financial institutions, social security institutions, the central bank and local government units.

The DOF attributed the decline in the CPSD last year to efforts by state-owned firms to improve revenue performance and rationalize spending.

The decline in the deficit of GOCCs offset the higher deficit recorded by the national government.

The national government ramped up spending last year to fuel domestic demand and counter the drag on economic growth caused by crises in industrialized countries.

Finance Secretary Cesar Purisima said the improving fiscal picture can also be traced to the mandate given to state-owned firms to boost their financial performance and rely less on government subsidies.

According to the DOF, the latest CPSD was equivalent to 1.5 percent of the country’s gross domestic product, lower than the 1.8 percent recorded in 2011.

Moreover, last year’s CPSD was 30 percent below the official ceiling set at P234 billion.

The national government, as reported earlier by the DOF, posted a budget deficit of P242.8 billion in 2012, up by 23 percent from the previous year’s P197.8 billion.

GOCCs registered a combined deficit of P4.9 billion, down by 75 percent from P19.8 billion in 2011.

The improvement in the fiscal performance of GOCCs was led by the Power Sector Assets and Liabilities Management Corp. (PSALM), which benefited from privatization proceeds and an increase in prices in the Wholesale Electricity Spot Market.

Social security institutions— namely the Social Security System, Government Service Insurance System, and Philhealth—recorded a combined surplus of P72.7 billion, up 52 percent from P47.97 billion, as they reported higher collection of contributions from members.

Government financial institutions—namely Land Bank of the Philippines, Development Bank of the Philippines, and Trade and Investment Corp.—posted a combined surplus of P9.3 billion, slightly down from P9.76 billion.

Local government units posted an aggregate net income of P73.6 billion, more than double the previous year’s P34.72 billion, on account of higher internal revenue allotment from the national government and increased revenues from local taxes.

The Bangko Sentral ng Pilipinas, on the other hand, recorded a deficit of about P95 billion in 2012, a surge from the P34 billion recorded the previous year due to its heavy dollar buying.

The dollar purchases were meant to temper the appreciation of the peso.