Despite a boost in government spending to harness ongoing rice crisis, the Philippine government says it is optimistic about achieving its goal of wiping out budget deficit at the end of the year, a national newspaper reported Thursday.
Finance Undersecretary Gil Beltran said the cost of intervention to ensure rice supply and smooth soaring import prices "has long been factored" in the budget for this year and the additional expenditure can be financed outside the budget.
"This has been anticipated. We are not worried about it," the Philippine Daily Inquirer quoted Beltran as saying.
He said the bureaus of Internal Revenue and of Customs posted growths of 18.39 percent and 20.6 percent in the first two months, boosting the government's confidence in significant improvements in revenue collection.
The Philippines registered a budget deficit of 9.4 billion peso(230 million U.S. dollars) in 2007, the lowest in 10 years. After 10 years in the red, the government expects a zero budget deficit this year, with revenues fully supporting the 1.23 trillion-peso (30.3 billion dollars) proposed budget in 2008.
However, as one of the world's top rice importers, the Philippines is facing an escalating battle to feed its almost 90 million population at a time when the world's major rice producers curtailed export and triggered sharp surges in rice prices on the global market.
Though the price for benchmark Thai 100 percent B grade white rice grew 161 percent since the start of the year, the Philippines says for 2008 it needs to buy not less than 2.2 million metric tons of foreign rice, accounting for more than ten percent of domestic consumption demands.
And the National Food Authority has vowed to maintain the price of government-subsidized rice at 18.25 pesos (0.45 U.S. dollars) per kilogram, a move that is seen to dilute public panic and grudge but will inevitably incur huge debts.
Swiss-based investment bank UBS said the cost for the Philippine government to buy higher prices of foreign rice and insist selling it at lower prices domestically would potentially cost not less than 43 billion pesos (1.05 billion U.S. dollars), or 0.6 percent of the GDP (Gross Domestic Products) for the year.
Economists also warned that a potential wage hike, a wider tax exemption scheme and other welfare programs discussed by the government and Congress at the moment might combine into a serious blow to the economy and might increase inflation pressure.
Source:Xinhua
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