Philippine Markets: 27 April 2011

27 April 2011

USD/PhP: 43.215 - 0.065 PSEi: 4321.32 + 15.75
USD/JPY: 81.75 PFINC: 961.70 + 1.36
EUR/USD: 1.4658 BDO: 54.60 - 0.15
GBP/USD: 1.6446 BPI: 59.00 + 0.50
PDSTF3M: 0.8142 MBT: 69.75 unch
Prices as of 4:00pm Source: Bloomberg, Reuters

Philippine Deficit Narrowed as Revenue Rose, Spending Fell
By Clarissa Batino

April 27 (Bloomberg) -- The Philippines’ budget deficit
shrank in March as tax revenue rose and spending declined,
taking the first-quarter shortfall to less than a quarter of the
government’s ceiling.
The gap was 18.13 billion pesos ($420 million) last month
from 63.87 billion pesos a year earlier, the government said in
an e-mailed statement today. The first-quarter deficit was 26.2
billion pesos, less than both the administration’s limit of 112
billion pesos and the shortfall of 134.18 billion pesos in the
three months through March 2010. Revenue climbed 10.6 percent in
March while spending fell 22.1 percent.
President Benigno Aquino is going after tax evaders,
smugglers and corrupt officials to increase revenue and narrow
the budget deficit from a record 314.4 billion pesos in 2010,
even as he plans to boost public spending on roads, schools and
airports. Philippines beat its target for tax collection in the
first quarter and more people have filed returns this year, the
Bureau of Internal Revenue said April 16.
“It’s good that tax collections are improving but at this
point, I would rather see the government take the preventive
action of spending to preserve gains in the economy,” Jonathan
Ravelas, a strategist at Banco de Oro Unibank Inc. in Manila,
said before the report. “The government has so much leeway to
do targeted spending, kickstart the economy and provide a boost
to consumption that may be slowing due to inflation and as the
value of remittances are threatened by peso gains.”
The peso has climbed about 3 percent in the past year.
Consumer prices increased 4.3 percent from a year earlier in
February and March, the fastest pace since May 2010.
Moody’s Investors Service in January raised its outlook on
the nation’s debt rating to positive from stable and maintained
the rating at Ba3, three levels below investment grade. The $161
billion economy grew 7.3 percent last year, the fastest pace in
34 years.
The government expects revenue to improve because of
“better economic prospects” and the fight against corruption,
Finance Secretary Cesar Purisima said in a statement today.

BDO UNIBANK, INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher
(632) 858-3001