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Manila: The Philippines budget deficit swelled in October from a year ago, with revenues failing to keep pace with higher spending as the government invested more in infrastructure to boost the economy amid the global crisis.
The budget deficit ballooned to 9 billion pesos (Dh665 million) in October from 1.5 billion pesos deficit a year ago but was smaller than the shortfall of 21.6 billion pesos in September.
The October data brought the ten-month fiscal shortfall to 62.3 billion pesos, which means Manila needs to narrow its monthly shortfalls for the rest of 2008 from October's level to keep within its full-year goal of a 75 billion pesos deficit.
"We can expect that the budget position will continue to be under pressure," said Vishnu Vara-than, an economist at Forecastweb.com. "The weaker economic outlook translates into pressure on tax revenue collections. Spending is expected to be expansionary and a weaker peso increases the financing burden of foreign currency liabilities."
Revenue at the main tax agency, the Bureau of Internal Revenue, grew 6.4 per cent in October from a year earlier, slowing from a 14 per cent growth in September. Annual growth in total revenue was at 10.7 per cent in October, the same as in September.
But spending expanded an annual 19.3 per cent in October from a year earlier, faster than growth of nearly 17 per cent in Sep-tember.
A successful sale of the government's 40 per cent stake in oil refiner Petron Corp before the year ends would help ease the pressure on its fiscal position.
Raising funds
The government wants to raise about 25.7 billion pesos by selling its stake in Petron at 6.85 pesos per share, a 49 per cent premium to the stock's closing price at 4.6 pesos yesterday.
Petron's current majority owner, a unit of UK investment manager Ashmore Group, has the right to first refusal over the government's stake. The government said it will not renegotiate the selling price it set on October 6 for its Petron stake. "The 25 billion figure is the offering price, so they either take it or leave it," Crisanta Legaspi, a Finance undersecretary for privatisation, said.
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