Biggest budget gap seen this quarter

The government expects to incur the biggest quarterly budget deficit for the year this quarter due to poor tax revenues, data from the Department of Finance (DOF) showed. Based on its 2010 quarterly fiscal program, the government expects its budget gap in the first three months of the year — traditionally the most sluggish period for tax collections — to hit P110.942 billion or 37.8 percent of the full-year target of P293.199 billion. Revenues from January to March are expected to hit P266.278 billion, while spending will likely reach P377.22 billion. The government incurs a deficit when it spends more than it can earn. To finance the gap, the state borrows either locally or abroad or both, leading to rising debt. The National Government's debt stock continued to climb at the end of October after it borrowed $1 billion from the global bond market, as well as due to the peso's fall against the dollar, data from the Treasury bureau showed. Total outstanding debt went up by 2 percent or P86 billion to P4.424 trillion as of end-October from the end-September level of P4.338 trillion. This means each of the 92.23 million Filipinos owes roughly P47,968. Finance data showed the budget gap is expected to rise again by P92.261 billion in the third quarter and by another P55.761 billion in the last quarter. The resulting first half deficit is P145.176 billion or 49.5 percent of the full-year program, while the second-half gap is projected to hit P148.022 billion. The Arroyo administration shelved a plan to balance the budget by 2008 or two years ahead of the original 2010 schedule due to the global financial turmoil. It is now looking at erasing the gap by 2013. Poor tax collections and unrealized gains from the sale of government assets led to a P6.4-billion budget deficit in November and a worse-than-projected gap of P272.5 billion for the 11-month period, worse than the full-year target of P250 billion. — GMANews.TV