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Public sector deficit seen to hit P233-B this year

abs-cbnNEWS.com | 07/01/2009 9:01 PM

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MANILA - The country's public sector is expected to be in the red again this year due to the ballooning budget deficit and the deteriorating financial condition of pension funds and the 14 monitored non-financial government-owned and -controlled corporations (GOCCs).

According to the Finance Department, the public sector may swing to a consolidated deficit of P233 billion or -3 percent of gross domestic product (GDP) this year from a surplus of P32.3 billion or 0.4 percent of GDP last year.

This after the Cabinet-level Development Budget Coordination Committee raised the government's budget deficit ceiling to P250 billion or 3.2 percent of GDP this year or almost four times the shortfall of P68.1 billion or 0.9 percent of GDP incurred in 2008.

The Finance Department said the total deficit of GOCCs would increase by about 130 percent to P63.6 billion this year from P27.7 billion last year.

On the other hand, the surplus posted by state-run institutions Government Service Insurance System, Social Security System, and Philippine Health Insurance Corp., would drop by 38.4 percent to P41.1 billion from P66.7 billion.

The surpluses of LGUs and the central bank, meanwhile, are seen to decline from P34.4 billion to P31.3 billion and P13.1 billion to P1 billion, respectively.

Likely bucking the downtrend are government banks Development Bank of the Philippines and Land Bank of the Philippines, which are projected to register a combined surplus of P8 billion this year compared to last year's P7.5 billion.

Originally, when the country's budget deficit ceiling for this year was only at P40 billion or 0.5 percent of GDP, the government expected the public sector to post a surplus of P45.4 billion or 0.5 percent of GDP.

The country's public sector posted a surplus for the third straight year in 2008.

The consolidated public sector deficit has steadily been increasing since 1997 and peaked at P235.95 billion in 2004 before improving to P103.54 billion in 2005. Thereafter, it swung to a surplus of P10.98 billion in 2006, P36.3 billion in 2007, and finally P32.3 billion last year.