MANILA – Finance Secretary Margarito Teves is optimistic the Arroyo government can achieve its P63-billion deficit target, or 0.9 percent of gross domestic product, through revenues from its privatization program.

Teves issued the statement following the decision of Fitch Ratings to raise to P125 billion, 1.9 percent of GDP, from P111 billion or 1.7 percent of GDP, its budget deficit forecast for the country due to lower-than-projected tax collection in the first half of the year.

Revenue shortfall from January to June this year amounted to P47.7 billion resulting in a P41-billion deficit, which is about 65 percent of the full-year deficit target.

Teves said the rating agency’s deficit projection does not include revenues from privatization efforts.

The government is expecting to gain at least P100 billion from the sale of its shares in big-ticket items like the San Miguel Corp. and Philippine National Oil Company-Energy Development Corp.

It targets to raise P1.12 trillion revenues both from tax and non-tax sources with expenditures reaching P1.18 trillion.

“Both the Bureau of Internal Revenue and Bureau of Customs have stepped up their collection efforts to boost revenues. The BIR is hoping to recover P20 billion of its shortfall in the first half while the BoC has committed to wipe out its P13-billion shortfall,” Teves added.

However, Fitch assured that the weak revenue collection in the first six months of the year “is not an immediate threat to Philippine Sovereign Ratings.”

“Public finance trends are still positive and government debt dynamics remain favorable, at least in the short term,” it said.

Fitch believes that “public spending remains tightly controlled” and “low interest rate are having a very positive effect on debt service costs this year.”

“Perhaps most importantly from a rating perspective, the increase in the 2007 national government deficit is not sufficient to reverse the trend of declining government debt ratios,” it said.

The government intends to further reduce its debt to 58 percent of GDP this year from year ago’s 64 percent.

Fitch added that the country’s debt dynamics are favorable this year “and are likely to remain so in 2008 and 2009.”*PNA

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