Budget deficit to be less than P200B as gov't underspends – report

The Philippines' budget deficit for 2012 will likely be less than P200 billion, or 1.9 percent of the gross domestic product for the year, according to The Market Call, a research report jointly published by the First Metro Investment Corp. and the University of the Asia & the Pacific.

The estimate is below the report's previous forecast of P220 billion to P230 billion and below the government's own deficit ceiling of P279 billion or 2 percent of GDP.

The report attributes the smaller than expected deficit to the disbursement of funds' remaining “gradual” despite the government's  vows to speed up spending.

“Despite our expectation that the national government will be able to increase its spending in the last two months of the year, the improvement in government departments’ efficient absorption and disbursement of fund has been gradual,” the report said.

As of end-October, the country's budget deficit stands at P115.736 billion, only 41.48 percent of the projected deficit ceiling for the year.

The report expects GDP growth for the year to be “only slightly below 7 percent” on the back of its 7.1-percent growth rate in the third quarter, and inflation for the year to be at a low of 3.2 percent.

The Bangko Sentral ng Pilipinas also forecasts an inflation rate of 3.2 percent for the year revised downward from its earlier forecast of 3.3 percent.

The Market Call expects investor confidence in the Philippines to grow in 2013, as it expects growth to “defy the gravitational pull of the global economy burdened by an intractable recession in the Eurozone.” — BM, GMA News