Deficit cap may be breached as govt spends for Ondoy, Pepeng damages
The Philippines is likely to breach its spending limits for this year since it needs to allot more funds for farms, roads, and other infrastructure damaged by two typhoons.
Even if the government pushes through with the sale of big-ticket assets – the P13-billion Food Terminals Inc. and the P12 billion stake in the Philippine National Oil Co.-Exploration Corp. – it will still be forced to spend more than P250 billion, its deficit cap for the year.
This much was admitted by Finance Secretary Margarito B. Teves on Wednesday.
“Even with two big-ticket items, because of Ondoy and Pepeng, we're likely to breach the P250 billion deficit target," Teves told reporters.
However, the government’s fiscal condition may change if it is able to sell a sequestered 24 percent block in San Miguel Corp.
The stake is roughly worth P50 billion and the government is waiting for a Supreme Court decision that will decide its ownership.
“If we get a favorable decision on SMC, we would still be able to hit the P250 billion," said Teves.
Without the SMC stake sale, the government may end up spending P300 billion more than it earns for this year.
But former budget secretary Benjamin Diokno is almost certain that the shortfall will exceed P300 billion.
Revenue-eroding measures approved by Congress – including those which allowed export-oriented companies to temporarily forego tax payments – have weakened tax collection efforts.
These measures, which include cutting the income tax rate to 30 percent from 35 percent, have prompted the government to forego revenues worth anywhere from P60 to P65 billion.
Another law – the minimum wage law – exempts minimum wage earners from income tax payments that costs the government losses worth P26 billion a year.
In the meantime, an estimated P3 billion is seen to be lost from the National Tourism Act.
Moreover, the Personal Equity Retirement Account (PERA) Act, a tax-free pension scheme costs the government P7 billion yearly. - GMANews.TV