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Philippines eyes balanced 2007 budget

Philippines eyes balanced 2007 budget

A lucrative asset sale boosted the Philippines' November budget surplus to a record 54.1 billion pesos (US$1.3 billion), putting it on track for a possible balanced budget this year, data showed on Tuesday.
Finance Secretary Margarito Teves said the government might balance its books for the first time in a decade, and a year ahead of schedule, after a record 90.6 billion pesos was raised from privatisations in the first 11 months of the year.
"We are looking at a much reduced deficit and maybe there's a fighting chance, let's see, let's hope, we might even end up with a balanced budget," Teves told reporters.
Surplus
Manila has a budget deficit target of 63 billion pesos for this year but, after raising 58.5 billion pesos from the sale of a majority stake in the geothermal firm PNOC-Energy Development Corp last month, it has a surplus of 12.6 billion pesos for the first 11 months.
The impressive headline numbers failed to move Philippine markets and analysts said the performance was unlikely to be repeated next year as Manila had sold many of its main assets and would have to rely on squeezing more out of reluctant taxpayers.
"Next year, the onus to push (tax collection) growth supportive of fiscal policies will be great, especially with the authorities' optimistic growth target," said Christy Tan, an economist with Bank of America.
Under pressure
The government hopes to raise about 30 billion pesos from the sale of state assets next year, a third of this year's total.
The assets lined up for sale include a stake of at least 12 percent valued at 6-10 billion pesos in utility firm Manila Electric Co, but not a 24 percent holding in San Miguel Corp, Southeast Asia's largest food and drinks group.
"SMC could still be part of it, depending on our ability to thrash out a few more issues with the farmers," Teves said of these shares, whose ownership is contested by coconut farmers.
The Philippines has struggled to tackle tax evasion and official corruption but, in a positive sign, the main tax agency, which provides two-thirds of government revenue, met its collection target in November for the first time in four months.
"I think tax collection will be better next year," said Luz Lorenzo, an economist with ATR-KIM Eng Securities.
"Tax collection has to improve. To date there has been a slight improvement because tax revenues to GDP for the nine months is at 14.4 percent and last year for the full year it was 14.3 percent."
The Philippines has relied heavily on foreign and domestic debt to fund its budget shortfalls but its improving finances have helped Manila halve its projected overseas commercial borrowing requirement to US$500 million for next year.
Last week the government said it wanted to raise domestic borrowing to 70 percent of its total requirement of 346.1 billion pesos in 2008, up from an original 64 percent.
Teves said the government may adjust the mix further to 75-25 in favor of local debt to help slow the rise of the peso, which has gained nearly 17 percent against the dollar this year.


Updated : 2021-05-06 14:57 GMT+08:00