2-month budget gap at a low P8.1B Revenues jumped 27.8%, expenses fell 6.4% By Ronnel Domingo Philippine Daily Inquirer MANILA, Philippines—Government expenses in February went over the budget by P21.5 billion, down from the year-ago deficit of P33.2 billion but reversed the budget surplus posted in January. This brought the budget deficit for the first two months to P8.1 billion. The shortfall was “way below the P52.3-billion ceiling for the (first two months of the year) and a big improvement from the P70.3-billion deficit posted in the same period last year,” Finance Secretary Cesar V. Purisima said. Purisima said the national government posted a primary surplus of P0.7 billion for the month, which was the seventh consecutive month under the Aquino Administration. This meant that a primary surplus was recorded every month since the new government assumed office last July. The government’s fiscal position, when reckoned without interest payments, yields the so-called primary surplus or deficit. “Primary surplus for the first two months of the year amounted to a total of P50 billion,” the finance chief added. January-February expenses reached P224 billion, or 6.4-percent less than the P239.4 billion incurred in the same period of 2010. Revenues for the first two months reached P216 billion, or 27.8 percent higher than last year’s P169 billion. The Bureau of Internal Revenue contributed P128 billion, up 10.7 percent from year-ago collections of P115.6 billion. The Bureau of Customs chipped in P39.1 billion, up 9.7 percent year on year from P35.7 billion. The Bureau of the Treasury turned in P33.6 billion, which was more than four times the P8.2 billion earned a year ago. Other government offices yielded P15.2 billion, up 59.6 percent year on In February alone, expenditures reached P101.5 billion, lower by 7.6 percent than the P109.9 billion spent in the same month of 2010. Total revenues reached P80 billion, an increase of 4.4 percent from P76.7 billion. Of the total, the BIR chipped in P53.4 billion, which was 4.8 percent higher than the year-ago P51 billion. Customs contributed P18.1 billion, an increase of 30.5 percent from P13.9 billion. The Treasury turned in P2.6 billion while other offices yielded P5.4 billion.
While "price movements continue to be well-behaved," Bangko Sentral ng Pilipinas (BSP) governor Amando M. Tetangco, Jr. told reporters, "We will continue to monitor developments, particularly for any signs of second-round effects and shifts in inflation expectations, to ensure that our policy settings remain appropriate." The central bank last week hiked key interest rates by 25 basis points, its first adjustment since July 2009, amid inflation worries brought about by rising oil prices. Succeeding reviews will be held on May 5, June 6, and July 28. "The steady March inflation rate shows the normalizing prices of key food and non-food commodities," central bank Deputy Governor Diwa C. Guinigundo said in an e-mail to BusinessWorld. "But we need to validate whether this movement is sustainable," he added. The National Statistics Office, in announcing the March data, said "[the] higher annual growths in services and miscellaneous items index were offset by slower annual rates in clothing and fuel, light and water index". Core inflation -- which strips out some volatile items such as food and energy -- eased to 3.4% in March from 3.6% in February. The latest annual inflation figure, which came at the lower end of the BSP’s target of 4-5% for the month, brought the first quarter average to 4.07%. Analysts polled by BusinessWorld had a median forecast of 4.7%. Prakiti Sofat, Barclays Capital regional economist for Southeast Asia, said headline inflation steadied as "food prices took a slight breather -- largely vegetables and rice prices." Institute of Development and Econometric Analysis research head Jackson L. Ubias, in an e-mail, said: "The strong peso really helped in tempering oil price hikes." But Standard Chartered regional economist Simon Kwok-Cheung Wong said March might just be a "brief pause in an uptrend." "There remains upside risk as oil prices are once again rising," he said in a separate e-mail. Rising price pressures, the analysts said, mean the central will likely raise interest rates by another 25 bps in May. "We continue to expect the BSP to hike the policy rate by a further 50 bps -- equally in May and July -- taking the policy rate to 4.75%," Ms. Sofat said. Mr. Wong concurred, saying: "We are still expecting another 25 bps hike." University of the Philippines economist Benjamin E. Diokno said inflation could hit 5% this month due to rising oil prices. Peter Lee U, economist at the University of Asia and the Pacific, expects a result below 4.5%, with further tightening hinged on the rise in consumer prices topping 5%. Mr. Diokno said the March data should give the BSP reason to "pause and reflect" amid signs of a slowdown in economic growth that could be aggravated by tighter policy. "The economy appears to be slowing, by how much, we don’t know yet. We will know when the first quarter numbers are released," he said. "In the meantime, the LEIs (leading economic indicators) point to a slowdown in the second quarter. This plus recent events should give reasons for BSP to pause and reflect." The composite LEI slid to 0.103 for the second quarter from a revised 0.115 in the first quarter, the National Statistical Coordination Board reported last week. -- Antonio Siegfrid O. Alegado and Daniel Anne Nepomuceno-Rodriguez |
U.S. Stocks Erase Gains Amid Concern Federal Reserve to Withdraw Stimulus U.S. stocks erased gains, preventing a third straight advance in the Standard & Poor’s 500 Index, as growing concern that the Federal Reserve will begin removing stimulus measures offset optimism about takeover deals. Boeing Co. (BA) lost 1 percent to help lead the Dow Jones Industrial Average down from an almost three-year high amid concern inspectors will find more problems with the company’s 737 jets. Google Inc. (GOOG) sank 3.2 percent as people familiar with the matter told Bloomberg News that the U.S. government is considering an antitrust probe. National Semiconductor Corp. (NSM), which led the earlier gain in the S&P 500, surged 71 percent after Texas Instruments Inc. (TXN) agreed to buy the chipmaker. The S&P 500 slipped less than 0.1 percent to 1,332.63 at 4 p.m. in New York after climbing as much as 0.4 percent earlier today. The Dow average retreated 6.13 points, or 0.1 percent, to 12,393.90. The Russell 2000 Index (RTY) advanced 0.5 percent, after rallying to a record intraday high. “Investors are fearful that if they don’t get another round of quantitative easing, the market doesn’t get another shot in the arm,” said Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co., which has about $110 billion in client assets. “I’m not convinced. We have solid economic figures and corporate earnings. The path of least resistance for the market would be higher.”
U.S. debt gained earlier, pushing two-year yields to a one- week low, after Fed Chairman Ben S. Bernanke said yesterday the economic recovery isn’t yet solid and a rise in inflation may be transitory. The central bank has completed almost two-thirds of its plan to buy $600 billion in Treasuries by June under quantitative easing. The Fed has left its key rate unchanged at a record low range of zero to 0.25 percent since December 2008. “There continues to be dissension within the Fed,” said Jeff Hussey, chief investment officer at Russell Investments in Tacoma,Washington, which manages $155 billion. “Bernanke said inflation is transitory and other members are calling into question QE2 and when rates should be raised. The risk is on the upside that rates will rise, so you may want to be a little short.” A short is a bet that Treasury prices will fall. Two-year yields advanced six basis points, or 0.06 percentage point, to 0.81 percent at 5:05 p.m. in New York, according to Bloomberg Bond Trader prices. The price of the 0.75 percent security due in March 2013 slid 3/32, or 94 cents per $1,000 face amount, to 99 7/8. The yield earlier fell to 0.75 percent, matching the lowest level since March 28. Yields on benchmark 10-year notes climbed six basis points to 3.48 percent after earlier falling to 3.40 percent, the lowest level since March 25. |
Oil Falls a Second Day After Signals U.S., China Demand Growth May Falter Oil fell for a second day in New York amid signs the pace of fuel demand recovery may falter in the U.S. and China, the biggest energy-consuming nations. Futures slipped from a 30-month high yesterday after the Institute for Supply Management reported a smaller-than-forecast increase in its U.S. index of non-manufacturing businesses, while China’s central bank raised interest rates. An Energy Department report today may show crude supplies rose for a fifth week last week, according to a Bloomberg survey of analysts. “This is a real myriad of factors from the global economic to domestic inventories to foreign exchange,” said Jason Schenker, president of Prestige Economics, an energy advisory firm in Austin, Texas. Oil for May delivery fell as much as 62 cents, or 0.6 percent, to $107.72 a barrel, in electronic trading on the New York Mercantile Exchange. It was at $107.81 at 8:33 a.m. Sydney time. Yesterday, the contract slid 13 cents to $108.34. Futures are 24 percent higher in the past year. The ISM’s index for service industries in the U.S., the biggest part of the economy, dropped to 57.3 last month from 59.7 in February. A measure of 50 signals growth, and economists had projected a March reading of 59.5, according to the median estimate in a Bloomberg News survey. Brent for May settlement rose $1.16, or 1 percent, to $122.22 a barrel on London’s ICE Futures Europe exchange yesterday, the highest since Aug. 1, 2008. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
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