Q1 budget deficit well under ceiling THE FIRST-QUARTER budget deficit came in well under the programmed ceiling, the government yesterday reported, on the back of strong tax collections and a reduction in spending. An P18.131-billion shortfall in March brought the tally for the first three months of the year to P26.197 billion, comfortably below the projected deficit of P111.986 billion. It was also significantly lower than the P134.179-billion fiscal gap recorded in the same period last year. Revenues totalled P323.078 billion, up 22% from a year earlier and surpassing the three-month goal of P319.271 billion. The primary boost came from the Bureau of Internal Revenue (BIR) -- responsible for over two-thirds of state tax collections -- which exceeded its P197-billion target by collecting P199.549 billion. Finance Secretary Cesar V. Purisima, in a statement, said the BIR had seen gains from "intensive tax campaign efforts." The Bureau of Customs (BoC), however, was hampered by a stronger peso and committed tariff rates reductions. The bureau -- the second-biggest revenue earner -- netted P62.618 billion in the first quarter, short of its P63.388-billion goal, even though collections for the period were higher than last year’s P60.581 billion. The Bureau of the Treasury put in P38.258 billion, more than doubling last year’s P13.822 billion. The three-month tally, however, was also short of the agency’s P40.522-billion goal. On the expenditure side, meanwhile, January to March disbursements of P349.275 billion were nearly P82 billion below the programmed P431.257 billion. March spending of P125.283 billion alone was down 22% from a year earlier. With the government having announced that it would be frontloading spending in a bid to boost the economy, Budget Secretary Florencio B. Abad said, "We are now looking deeper into the cause of slower disbursements ... So far, indications point to more caution exercised by agencies in planning and spending funds allotted to them." Agencies are also reviewing their projects and programs in an attempt to bring down costs and create savings, he claimed. "For example, the Department of Public Works and Highways has put on hold many of its infrastructure projects until they have finished their reassessment of road conditions and review of infrastructure cost assumptions," Mr. Abad said. "Per [Public Works] Secretary [Rogelio L. Singson], initial results show that government could save ...P6-7 billion that can be used for the rehabilitation of more roads and bridges," he added. University of the Philippines economist and former Budget secretary Benjamin E. Diokno slammed this as a "very poor excuse." "The review should have been done and completed during the first six months of the Aquino presidency... The government has a lot of catching up to do," he said in an e-mail to BusinessWorld. While part of the expenditure reduction can be traced to lower interest payments -- P90.720 billion compared to the programmed P101.247 billion -- Mr. Diokno said most of the cuts were in spending that would have benefited the economy. "This reflects a very slow moving bureaucracy if we believe DBM’s (Department of Budget and Management) press statement that it has already frontloaded the bulk of the 2011 budget," he said. The Budget department recently announced that it had released almost half of the P1.645-trillion national budget for 2011 during the first quarter. The government wants to keep this year’s budget deficit to 3.2% of gross domestic product (GDP), or P290 billion, from last year’s record of P314 billion or 3.7% of GDP. Economist Euben Paracuelles at Nomura in Singapore said the first quarter result had placed the government "on track to beating the full-year forecast." "My forecast is still 3% of GDP," Mr. Paracuelles said. Radhika Rao at Forecast Pte in Singapore, meanwhile, said: "taken in isolation, [the] marked improvement in Q1 deficit is commendable... Markets will take solace from the narrowing deficit picture, though below-target spending still remains a source of concern." -- D. C. J. Jiao with a report from Reuters
The National Telecommunications Commission (NTC), Globe counsel Rodolfo A. Salalima said in an April 26 letter to the agency, "cannot and must not shirk from its legal obligation to... regulate, if not forestall, the deal’s grave implications and impact on free competition and, in the long term, the common good." An NTC official said the planned purchase -- announced last month and targeted for completion by end-June -- was being reviewed following instructions from Malacañang. A PLDT executive, meanwhile, called Globe’s appeal "regulatory blackmail." The questioned P69.2-billion deal involves PLDT’s acquisition of a 51.55% stake in Digitel -- which owns the Sun Cellular brand -- from JG Summit Holdings, which in return will get a 12.8% stake in the dominant telco. The Globe letter, copies of which were distributed to reporters yesterday during the firm’s demonstration of a planned service, states that the NTC needs to act given its mandate to protect consumers and level the playing field under Republic Act (RA) 7925 or the Public Telecommunications Policy Act. The law, Globe said, was specifically passed in 1995 to end a monopoly enjoyed by PLDT. It noted that the PLDT-Digitel deal, if consummated, would give PLDT 70% of the cellular mobile market, leaving Globe with 30%. The frequency ratio of 1:3.5 is also in favor of PLDT, it added. The firm urged the enactment of antitrust laws and the issuance of NTC policies, among them a circular defining any entity with a minimum 50% share of the market as a "monopoly carrier." It called for aggressive enforcement of interconnection between telcos and also the implementation of a policy on "IP peering" -- interconnection between two internet service providers -- that would allow for a better Web experience for consumers. "The present PLDT/Digitel deal...strikes at the very core of free competition and, if not preempted or otherwise regulated, will...bring back this country to the dark ages of the old monopoly pre-RA 7925," Globe said. Sought for comment, NTC Commissioner Gamaliel A. Cordoba told BusinessWorld, "The deal will need an approval from NTC, and we are studying the deal on how we can prevent it from adversely affecting consumers." "President [Benigno S. C. Aquino III] has already given us instructions to study the whole deal in cooperation with economic managers and the [Justice department]." Public hearings, Mr. Cordoba added, will be scheduled once PLDT and Digitel submit details of the deal. Ray C. Espinosa, head of regulatory affairs and policy at PLDT, said in a statement that "these issues are being raised by Globe with much thunder and lightning in order to gain leverage and exact concessions from PLDT...Globe wants to use the NTC to deliver these concessions on a silver platter." "The monopoly issue being raised by Globe is a ruse. It is meant to weaken the resolve of the NTC to approve a deal that will bring enormous benefits to the public in terms of better service and accelerated high-speed broadband Internet service throughout the country," he added. Mr. Espinosa also claimed that Globe was also involved in "institutionalized combinations of restraint of trade," noting exclusive arrangements with property development projects. Globe shares closed P5 higher at P880 per yesterday, while PLDT’s ended the day P10 up at P2,466 apiece. Shares in Digitel were unchanged from Tuesday at P1.56 per share. Mediaquest Holdings, Inc., a unit of the Beneficial Trust Fund of PLDT, has a minority stake in BusinessWorld. -- K. A. Martin |
U.S. Stocks Rally as Federal Reserve Signals Low Interest Rates; GE Gains U.S. stocks rose, giving the Standard & Poor’s 500 Index the fifth gain in six days, as the Federal Reserve renewed its pledge to stimulate growth with low rates and said a pickup in inflation is likely temporary. General Electric Co. (GE) added 2.7 percent after saying it wants to boost its dividend. Moody’s Corp. (MCO), whose founder John Moody created credit ratings more than a century ago, climbed 6.7 percent as profit beat estimates by 25 percent. Amazon.com Inc. (AMZN) gained 7.9 percent as the world’s largest online retailer reported sales that topped predictions and Deutsche Bank AG increased its share-price estimate to $215. The S&P 500 added 0.6 percent to 1,355.66 at 4 p.m. in New York. The Dow Jones Industrial Average gained 95.59 points, or 0.8 percent, to 12,690.96. The Russell 2000 Index of small companies rose 0.6 percent to 858.31, a record. The Fed left its benchmark interest rate in a range of zero to 0.25 percent and retained a pledge in place since March 2009 to keep it “exceptionally low” for an “extended period.”
Yields on the long bond rose the most in a week as Bernanke, in his first press briefing after a Fed policy meeting, wouldn’t predict when the central bank will start to tighten monetary policy. The central bank also lowered its forecast for economic growth, while Bernanke said inflation is likely to be “transitory.” The U.S. sold $35 billion in five- year debt in the second of three note auctions this week. “Bernanke didn’t back down on the idea that rates would stay low for an extended period and the Fed will err on the side of inflation, which is a negative for longer-end Treasuries,” said Jay Mueller, who manages about $3 billion of bonds at Wells Fargo Capital Management inMilwaukee. “The cost to that view may be more inflation down the road.” Thirty-year yields climbed six basis points, or 0.06 percentage point, to 4.45 percent at 5:10 p.m. in New York, according to Bloomberg Bond Trader prices. They rose as much as seven basis points, the biggest intraday jump since April 18. The price of the 4.75 percent security due in February 2041 slid 1 2/32, or $10.63 per $1,000 face amount, to 104 7/8. Ten-year note yields rose five basis points to 3.36 percent. Two-year note yields gained four basis points to 0.64 percent and touched 0.70 percent, the highest since April 15. |
Oil Rises a Second Day After U.S. Fuel Stockpiles Fall More Than Forecast Oil climbed for a second day in New York after a government report showed gasoline stockpiles in the U.S. declined more than analysts estimated to the lowest since August 2009. Futures advanced from the highest settlement in more than two weeks after the Energy Department said gasoline inventories fell 2.51 million barrels to 205.6 million, declining for the 10th week. Supplies were projected to drop 1 million barrels last week, according to analysts surveyed by Bloomberg News. “Gasoline supplies are definitely on the light side,” said Kyle Cooper, director of research for IAF Advisors in Houston. “With gasoline supplies falling and prices climbing, refiners can pay more for oil. They are going to pay more to take delivery of extra barrels of crude because they know they will make money processing it into gasoline.” Crude oil for June delivery gained as much as 64 cents, or 0.6 percent, to $113.40 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $113.24 at 8:51 a.m. Sydney time. Yesterday, it climbed 55 cents, or 0.5 percent, to $112.76, the highest since April 8. Brent oil for June settlement increased 99 cents, or 0.8 percent, to end the session at $125.13 a barrel on the London- based ICE Futures Europe exchange yesterday. It was the highest close since April 8. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
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