By Manolo Serapio Jr.
MANILA, April 23 - The Philippines may have overshot its budget gap ceiling of 110.9 billion pesos ($2.5 billion) for the first quarter due to increased state spending, a government source said on Friday, overshadowing higher revenue collection.
"Actual spending was higher than the program for the first quarter so it's likely that we could breach the deficit ceiling of 110.9 billion pesos for the period," the source who has knowledge of the data told Reuters.
The government said earlier it was optimistic its first-quarter budget gap would be smaller than its forecast because of improved tax collections. [ID:nSGE62M0BA]
But actual state spending in January to March exceeded the target of 377.2 billion pesos, partly because of "frontloading" of expenses ahead of a ban on government agencies entering into new contracts before the May 10 national elections, the source said. The ban took effect on March 26. The earlier-than-usual enactment of the 2010 national budget in February which allowed faster disbursements, as well as spending for infrastructure reconstruction following last year's typhoons and measures to mitigate impact of the El Nino dry weather on crops also contributed to the increased spending, the source said.
The quarterly budget gap was likely to be bigger than forecast even with the two main revenue agencies outpacing their targets, said the source.
The Bureau of Internal Revenue, which accounts for around two-thirds of state revenue, said on Wednesday it had collected 174.5 billion pesos in January-March, 16.8 billion pesos more than its target. [ID:nSGE63K05U]
The second-biggest tax collector, the Bureau of Customs, said last month it was on course to top its 54.27 billion peso target for the quarter. [ID:nSGE62U0GF]
The Philippines is hoping better tax collections would trim its 2010 deficit to 293.2 billion pesos, or 3.5 percent of its gross domestic product, from a record 298.5 billion pesos in 2009.
The fiscal gap for the first two months of the year was 70.3 billion pesos, wider than the year earlier's 67 billion pesos.
The Department of Finance is scheduled to release first-quarter fiscal data on April 27.
