- The Washington Times - Wednesday, March 19, 2003

SINGAPORE, March 19 (UPI) — The Philippines' budget deficit reached $573 million (31.53 billion pesos) in the first two months of the year, putting it on track to meet a projected first-quarter shortfall of $1 billion. For the month of February alone, the budget deficit was $320 million.

The country's worsening fiscal deficit has been a continuing worry for investors over the past year, but the government's recent measures to improve tax collections seemed to be bearing fruit.

"For two months now we have seen continued improvement in our fiscal performance with revenues on track, expenditures under control, and our accumulated deficit at better-than-expected levels," Finance Secretary Jose Isidro Camacho said. "This gives us confidence that the government is poised to achieve its full-year 2003 fiscal target."

The budget deficit is targeted at $3.7 billion or 4.7 percent of gross domestic product for this year.

Revenue collections for the month increased by 7.1 percent, while that of expenditures dropped by 1.2 percent, a sign the government has its expenditure well under control, the Department of Finance said.

Despite lower domestic interest rates, which continued to adversely affect taxes from bank deposits, the Bureau of Internal Revenue posted a 9 percent improvement in February over the same period last year.

BIR Commissioner Guillermo Parayno noted that despite some weak external variables affecting other income sources, the reforms are finally showing concrete results with the 19 Revenue Regions outperforming their goal by 3 percent and contributing $223 million to the February collections, which accounted for nearly half of the month's revenues.

"We have seen remarkable growth in other percentage taxes from insurance premiums (up 35 percent), amusements (up 362 percent), and franchise taxes (up 40 percent)," he said. "Meanwhile, our value added taxes also grew respectably by 9.6 percent."

Meanwhile, the Customs Bureau continued to see strong growth with collections increasing by 18.6 percent in February over the same period last year.

Customs Commissioner Antonio Bernardo said this reflected increased efficiency resulting from the ongoing reforms and in particular, the higher-than-expected volume of dutiable imports presumably resulting from the closure of the customs bonded warehouses.

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