Aquino government vows to contain budget gap.

 Aquino government vows to contain budget gap.  

The Aquino management vowed yesterday to have this year’s financial statement deficit within the revised target of P325 billion even with inheriting from the previous management a budget gap of P196.7 billion for the first six months of the year.

Finance Secretary Cesar Purisima gave this promise yesterday as he said that the administration would not spend beyond the automatic disbursements unlike the previous administration’s prudence binge of P45 billion from January to June.

“What we’re seeing with these numbers is really the negligence of our budget. Prudence by P45 billion, I think is unconscionable,” Purisima told reporters yesterday.

The Bureau of the Treasury reported on Wednesday that the six-month budget deficit hit P196.7 billion or 28.2 percent more than the P153.4-billion financial statement deficit recorded in the same period last year.  

The six-month figure is P51.6 billion higher than the programmed maximum of P145.2 billion for the period due essentially to higher-than-programmed spending.

National Treasurer Roberto Tan recognized the wider-than-expected deficit during the six-month period to the setbacks encountered by the government in the privatization of state-owned assets and to higher-than-programmed spending.

The Arroyo administration had planned to raise P30 billion from the sale of government-owned possessions in the first half of the year but this did not happen because of poor market situation and supervisory concerns.

In June only, the budget deficit hit P34.6 billion or 14.5 percent more than the P30.2-billion deficit recorded in the same month last year.

Even with the record deficit incurred by the government in the first six months, Purisima guaranteed that the Aquino administration would manage state bank account better.

“I’m convinced that for the next six months, we will not do the same error on the expense part. We will stick as closely as possible to the budget,” he said.

The Finance chief said the government is already reviewing where the operating expense went. Nonetheless, he approved that shoring up revenues is a major challenge for the government.

“Nothing is easy. I believe that we’re more disciplined than the previous management. We won’t go beyond it (the P325 billion deficits) by that much. We can exceed it by one peso. I cannot be accurate but it will be closed to the target as potential. It could be less,” he said.

The Aquino government hopes to convey the tax effort to 15 percent of gross domestic product (GDP) in a year, and progress from the preceding government’s target to bring this to 13 percent of GDP.

The tax effort measures the government’s capacity to raise tax collection that is corresponding with the growth of the economy.

In the first quarter of the year, the government’s tax effort improved to 12.3 percent of GDP from the 11.6 percent of GDP recorded in the same period in 2009.