Philippines to post record budget deficit in 2010
The Philippines, Asia’s largest sovereign issuer of foreign debt, is expected to post a record budget deficit in 2010 after a larger-than-expected shortfall in the first quarter, a Reuters poll of 10 economists showed.
The median forecast was for the deficit to widen to P307.5 billion ($6.9 billion) from P298.5 billion in 2009, the current record deficit in peso terms.
Four economists said Manila could hit its target of P293.2 billion, but none predicted a smaller-than-expected deficit.
The 2009 deficit was equal to 3.9% of gross domestic product. Forecasts for the 2010 deficit ranged from the government’s target, equal to 3.5% of GDP, to P362 billion, or 4.3% of GDP.
Officials said the first-quarter slippage on the deficit was largely due to the frontloading of government spending, mainly on infrastructure projects, ahead of a ban on new state contracts before the May 10 presidential elections. The ban will be lifted when the election period ends on June 9.
As such, depending on the plans of the new government, they said spending could be tempered for the rest of the year, and planned asset sales could boost state revenue.
Finance Secretary Margarito Teves said last week the government might need to increase debt issues this year if the budget slippage was not controlled, leading cautious investors to shift to short-term bonds. Reuters
