Recto: Worry about fiscal deficit, not recession
abs-cbnNEWS.com | 06/16/2009 12:01 AM
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MANILA - Socio-economic planning secretary Ralph Recto continued to reiterate that the Philippines is not likely to go through an economic recession.
Instead, Recto, who is also director general of the National Economic and Development Authority, said the country's biggest threat is the widening fiscal deficit.
“The biggest challenge is the deficit to GDP ratio and the debt to GDP ratio,” Recto said.
In the first four months of 2009, the fiscal deficit reached P111.8 billion, already more than four times the P25.8 billion deficit posted in the same period last year.
Revenue collections had been shrinking. Corporate income taxes fell 3.3 percent to PhP85.9 billion in the first quarter, while excise tax collections from cigarettes and liquor also tumbled 21 percent to PhP9.21 billion in the first three months.
Yet, the government had to increase spending (through an economic resiliency program) to help cushion the local economy from the global economic crisis.
Already, the revised 2009 target for deficit to GDP ratio is at 3.2 percent.
Recto's concern about the ratio has been expressed before by multilateral and other external groups. They said a wide budget gap reflects the inability of the country to meet tax collection targets.
A higher fiscal deficit translates to the need for the national government to increase its debts.
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