Philippines seen to post budget deficit next year

MANILA, Philippines - The government will still post a budget deficit next year, the National Economic and Development Authority said Wednesday. Augusto Santos, acting NEDA director general, told reporters that the Arroyo administration is looking at a budget deficit of 0.5 percent of gross domestic product (GDP) in 2009 owing to the global slowdown and costlier food and oil. However, he said the government may still opt to balance the budget next year if the global economy recovers by then. "Depending on the developments, we are eyeing a deficit of 0.5 percent of GDP or P40 billion to P45 billion, but if conditions improve we will push for a balanced budget by 2009," Santos said. For this year, the government is expecting a budget deficit of 1 percent of GDP or P75 billion as it aims to shield the economy from the effects of galloping food and oil prices. In 2007 the government posted a deficit of P12.4 billion. Under the Medium Term Philippine Development Plan for 2004 to 2010, the Philippines is aiming a balanced budget by 2010. Despite the gloomy economic outlook, Santos maintained that the government could attaint the 5.7 percent low-end economic growth forecast for this year. "At least the low end of the (GDP) target will not be threatened," he said. The Development Budget Coordinating Committee is targeting a GDP growth of 5.7 percent to 6.6 percent this year. If the situation worsens, Santos said the government may again revise downward the country's economic growth projection by September. "If the trend is really sharp, we will have no choice but to adjust targets," he said. The economy, as measured by GDP expanded by 5.2 percent during the first quarter of this year. The NEDA also said that for every one percent increase in transportation fare, the inflation rises by 0.017 percentage point and if peso depreciates by one percent, inflation will increase by 0.15 percentage points. The government earlier approved the fare hike by P0.50 for jeepney, bus, P1 and taxi, P10. It added that for every one percent increase in the price of oil, inflation will also go up by 0.067 percentage points. The Bangko Sentral ng Pilipinas expects inflation this year to average 7 percent to 9 percent, above the government target of 3 percent to -5 percent and last year's actual average of 2.8 percent. GMANews.tv