The Aquino administration told a congressional hearing on the proposed budget for next year that the country would likely enjoy a lower budget deficit than programmed. Finance Secretary Cesar Purisima on Wednesday said that though the Aquino economic team is only looking at a budget shortfall of P298.6 billion, or 3.3 percent of the gross domestic product (GDP) for 2011, the government is likely to achieve a lower deficit of about P226 billion, or 2.5 percent of the GDP.
Purisima’s pronouncement came after Rep. Joseph Emilio Abaya, who heads the House Committee on Appropriations questioned the apparently prudent forecast of the administration on the budget shortfall for next year.
The Finance chief said that the administration opted to use a lower than the actual goal of GDP forecast growth of 5 percent to 6 percent instead of the projected 7 percent to 8 percent economic expansion next year.
“Given the scenario that the country would achieve a GDP growth of 7 percent, we are also expecting a lower deficit than programmed next year,” Purisima added.
An indicator of economic performance, GDP is the amount of goods and services produced in the country in a year.
The deficit-to-GDP ratio, in turn, is a measure of how sustainable the government’s revenue shortfall is.
During a chance interview, the Finance chief clarified that the 2.5 percent of GDP, which is essentially lowered as against its Development Budget Coordination Committee-approved P298-billion budget shortfall,l or 3.3 percent of GDP would only come into play even if the country’s economic expansion would be sustained at the 7 percent to 8 percent.
“This is likely to happen with the public-private partnership initiative since toward the end of the year until even the Aquino administration ends in 2016. We are aiming to attract investors in the infrastructure sector. Hence, spurring economic growth,” he said.
The Finance chief also clarified that the Aquino administration does not intend to accomplish a balanced budget within its term and would be content with the 2-percent budget deficit goal against the GDP.
Katrina Mennen A. Valdez
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