Thursday, February 14, 2008 Deficit figures foretell 2008 fiscal crisis By Karl G. Ombion
AS THE Arroyo administration plays up its full-year 2007 deficit of P9.4 billion as being the "lowest in a decade", a closer look at the figures foretells a possible fiscal crisis this year, said Sony Africa, senior economist of independent think-tank IBON Foundation.
Africa, in a statement to the media said the deficit was kept in check by one-time privatization revenues of P90.6 billion Without these proceeds from the sale of government assets, the 2007 budget deficit would have reached more than P100 billion, Africa said.
Meanwhile, he pointed out that government has not been able to improve its revenue collections. Although the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) both were able to increase their collections from 2006, such collections were substantially lower than government targets. The BIR had a revenue shortfall of P54.3 billion and the BOC, P17.7 billion.
Africa said that if revenue collections don't improve in 2008 then the administration will end up with a P68.4 billion deficit (extrapolating revenues without privatization of P1,194 billion on the assumption that revenues increase by 8.1 percent in 2008, less budgeted expenditures in the national budget program of P1,227 and factoring in targeted privatization revenues of P30 billion). This also implies that government faces an underlying budget deficit of P98.4 billion in 2008 if privatization revenues are not factored in.
Revenue collections in the coming year are unlikely to improve because of the Arroyo administration' s dismal record in addressing large-scale corruption, as shown by its alleged attempts to cover up anomalies in the ZTE broadband network deal, plus its continued policy on liberalization which similarly cost government billions in foregone revenues because of tariff reductions and eliminations.
And since the focus of government's efforts to address the fiscal crisis are to ensure that it can continue to service the country's debts, new taxes may be inevitable- something that the Department of Finance has already hinted at, Africa said.
