Bloomberg News

Philippines Posts Budget Deficit as Revenue Growth Slows

October 25, 2011

(Updates with comment from economist in fourth paragraph.)

Oct. 25 (Bloomberg) -- The Philippines posted a budget deficit in September after a surplus in the previous month, as slowing revenue growth offset a decline in government spending.

The shortfall was 18.5 billion pesos ($428 million), compared with a 9.2 billion-peso surplus reported earlier for August, according to an e-mailed government statement in Manila today. The nine-month gap was 52.99 billion pesos against a targeted 234.35 billion pesos, and compares with 259.79 billion pesos a year earlier.

President Benigno Aquino unveiled a 72 billion-peso stimulus package this month as a faltering global recovery prompted the Philippine government to cut growth forecasts for this year and next. Asian nations have shifted their focus to protecting their economies as a potential Greek default and unemployment above 9 percent in the U.S. threaten to push the world into another recession.

“The government must speed up spending at a time when global uncertainties threaten to hurt domestic growth,” Jonathan Ravelas, chief market strategist at Banco de Oro Unibank Inc., the Philippines’ largest lender, said before the report.

The peso rose for a second day to 43.15 per dollar today, according to Tullett Prebon Plc. The yield on benchmark five- year bonds due September 2016 fell 3 basis points to 4.8 percent, according to Tradition Financial Services.

The government narrowed its forecast for the budget deficit on Oct. 12, predicting the shortfall this year may be 2.6 percent of gross domestic product, or about 260.6 billion pesos, from a previous estimate of 3 percent or about 300 billion pesos.

From a year earlier, revenue in September climbed 13.5 percent, while spending slid 0.6 percent.

--With assistance from Clarissa Batino, Cecilia Yap and Norman Aquino in Manila. Editors: Shamim Adam, Stephanie Phang

To contact the reporters on this story: Cecilia Yap in Manila at cyap19@bloomberg.net; Karl Lester M. Yap in Manila at kyap5@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net


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