(UPDATE) RP to sell assets to keep deficit target

MANILA – The Philippines will have to sell assets to keep its budget deficit target this year, Finance Secretary Margarito Teves said, after the fiscal gap ballooned in the first 7 months.

The country’s budget deficit hit P34.6 billion in July, bringing the fiscal shortfall for the first 7 months of the year to P188 billion, up 462.5% from last year’s P33.4 billion. The July figure is higher than the P20.3 billion budget gap in June, and represents more than half of the government’s P62.5 billion target for the third quarter.

Teves said the Philippines could still meet its deficit goal of P250 billion ($5.2 billion) or 3.2% of gross domestic product (GDP) this year, but the task is getting more difficult.

He warned that “the space is getting tighter” for Manila to attain this full-year ceiling as the government accelerates spending on infrastructure and social services to fend off the global slump, which it also blames for its poor tax effort.

Spending rose 18.1% to P832.1 billion, but revenues fell 4.1% to P644.1 billion during the first 7 months “due to the slowdown in economic and business activities.”

Teves said Manila needs to sell key assets within the year to keep its deficit target. These assets include the government’s 40% stake in state energy firm Philippine National Oil Co. (PNOC) and 40% of its exploration subsidiary PNOC-Exploration Corp.

It would also need to offload its state grains monopoly Food Terminal Inc.

Manila is also planning to lease a government property in Japan, Teves added.

And next year, he said the government was looking at selling more assets such as part of the reservation occupied by the country’s main prison, two other Manila properties, and its remaining stake in brewer San Miguel Corp.

Teves urged Congress to “act on our proposed revenue-enhancement measures and put a moratorium on revenue-eroding measures to help us ensure a steady flow of resources for the government and sustain business confidence.”

Among others, the Finance Deparment is calling for an increase in taxes on sin products such as tobacco and alcohol, as well as the rationalization of fiscal incentives.

• ABS-CBN