PHL fiscal deficit likely to stay under the ceiling – report

The Philippine fiscal deficit will likely register at P250 billion this year, way below the programmed P290 billion ceiling, because of slower spending in the first quarter, according to the latest Market Call, a joint research report by First Metro Investment Corp. and the University of Asia and the Pacific (UA&P). However, the economy will likely fare better this second quarter compared with the 4.9-percent gross domestic product growth in the in the first three months of the year, the report also said. “The National Government continued to underspend as total expenditures, amounting to P112.1 billion, actually fell by 8 percent… The current surplus makes it highly probable for the deficit in 2011 not to exceed P250 billion," UA&P and First Metro said. “It also leaves a lot of room for the government to spend more on infrastructures and on safety nets for the poor in the coming months," Market Call added. The slowdown in the first quarter was evident, but a recovery in exports would help the economy recover in the second quarter of the year, according to the report. A little better GDP “GDP growth in the second quarter may be a little better than the first quarter as we expect exports growth to recover, investments to continue to rise and the government to spend more than it did in the first quarter of the year," the report also said. Higher government spending would also boost the economy during the second quarter, it added. Lower fiscal spending was partly blamed for the slower economy in the first quarter. With food prices expected to be quite stable in April to June, UA&P and First Metro said that inflation for the quarter will likely stay within 4.5 percent to 4.7 percent. — VS, GMA News