RATHER than bring flashes of hope and optimism, the opening days of 2010 brought instead dreary reports of a brewing struggle.

Of course, our economic seers have anticipated the possible results of the encounters and measures to address their impact.

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The initial disturbing note is that this year’s national budget has not yet been signed by the President although it has been approved by both houses of Congress.

The current national budget provides more than a trillion pesos of expenditures for the incoming year.

The delay is in the printing of copies of the voluminous law.

But no worry, so say concerned government officials; last year’s budget covering the affected months could always be used.

But in an election year like now, there might be some political catch.


The finance secretary described 2009 as a very stressful year, what with government revenues sinking much “lower than the previous year’s level, which he described as unprecedented.”

New tax laws enacted by Congress and which took effect in 2009 resulted in a loss of “about P40 billion in potential revenues” and low government collection.

Combined with damage from the typhoons, the budget deficit ballooned to P272.5 billion as of November.

Consequently, government had to go thrice to the global bond market, “raising a total of P154.54 billion.”

While in the domestic market, the Bureau of Treasury resorted to swapping maturing bonds for new issues in January and the issuance of retail treasury bonds in September.

Similar prospects hound this republic in the just starting year.

The total shortfall in tax collections is expected to reach P110 billion this year, which is about 40 percent of its P280-billion forecast deficit for 2010.

Modest growth

Capital Market Research said that this problem has to be addressed and that “chances of any significant improvement under the current administration are slim.”

Attuned to the developing financial problem of the country during the current year, the Bangko Sentral Ng Pilipinas (BSP) “may keep its policy rates at their current historically low levels throughout 2010.”

This is so because the BSP expects the Philippines to experience just a modest growth and “consumer prices to increase only minimally.”

With this kind of environment, the country will have an easier time raising the funds in the bond market.