Philippines Posts Fourth Budget Deficit, Peso Falls
The Philippine government reported a fourth monthly budget deficit in August as tax revenue faltered amid the global recession, prompting the peso to fall.
The shortfall of 22 billion pesos ($460 million) widened the eight-month deficit to 210 billion pesos, the Finance Department said in an e-mail in Manila today. Spending fell 0.2 percent in August from a year earlier and revenue dropped 20.1 percent after falling 3 percent in July.
Slowing economic growth earlier this year prompted the government to widen its 2009 budget-deficit target to a record 250 billion pesos, as the global slump hurt tax collection and forced President Gloria Arroyo to boost spending. The budget report may revive investor concern about the strength of the Philippine economy, said Antonio Espedido at China Banking Corp.
“The budget deficit is a sign of weakness,” said Espedido, a Manila-based treasurer at China Banking. “If there’s a sign of weakness, some investors try to pull out of the country.”
The peso, which was little changed before the announcement, fell 0.2 percent to 47.895 a dollar at 10:02 a unsecured personal loans.m. in Manila, according to Tullett Prebon Plc. The Philippine Stock Exchange Index dropped as much as 0.6 percent.
The Philippine government said yesterday it had sold 100 billion pesos of so-called retail bonds, in an offering scheduled to end Sept. 22. That compares with 70 billion pesos last year.
Dollar Bonds
The government sold $750 million of U.S. dollar bonds in July, adding to $1.5 billion sold in January. Its targeted 2009 budget deficit would be the biggest since Bloomberg data began in 1985.
The Southeast Asian nation’s economy grew 1.5 percent in the second quarter from a year earlier, accelerating from a decade-low 0.6 percent the previous three months.
The Bureau of Internal Revenue, responsible for more than 60 percent of government earnings, collected 67.6 billion pesos in August, 14 percent lower than a year earlier, according to the budget report today. Collection at the Bureau of Customs fell 28.5 percent.