Bloomberg Anywhere Login


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Philippine Deficit Widens to Record as Aquino Boosts Spend

March 5 (Bloomberg) -- The Philippines’ budget deficit widened to a record in December after President Benigno Aquino accelerated spending on roads and schools to bolster an economy struggling to counter the effects of Europe’s debt crisis.

The shortfall was 101.5 billion pesos ($2.4 billion), the government said in a statement released in Manila today, compared with 22 billion pesos for November reported earlier. That is the highest since Bloomberg began tracking the data in 1994. The full-year gap was 197.8 billion pesos last year, compared with a record 314.5 billion pesos in 2010. Spending surged 43.2 percent in December while revenues grew 6.8 percent.

Aquino is increasing spending to a record this year while seeking $16 billion of investments in mass rail and airports in an effort to boost expansion to as much as 8 percent annually. Bangko Sentral ng Pilipinas cut its benchmark interest rate for a second straight meeting last week, joining neighbors from Thailand to Indonesia in easing monetary policy to shield growth from a faltering global recovery.

“Spending is finally starting to kick in and if this continues this year and translate into higher economic growth, it will be positive for both interest rates and exchange rate in the long term,” said Rafael Algarra, executive vice president of financial markets at Security Bank Corp. in Manila.

Yields on bonds due July 2031 jumped to a one-month high, according to Tradition Financial Services. The peso fell 0.3 percent to 42.84 per dollar, according to Tullett Prebon Plc.

“The market used the high deficit as an excuse to push the yields up,” said Jonathan Ravelas, market strategist at BDO Unibank Inc. in Manila.

Narrow the Gap

Growth in the $200 billion economy eased to 3.7 percent last year from 7.6 percent in 2010 as Europe’s debt crisis curbed exports and as government spending faltered. The nation won credit-rating upgrades from Fitch Ratings and Moody’s last year after stepping up efforts to narrow the budget gap, which the government forecasts will be 279 billion pesos this year, or 2.6 percent of gross domestic product, from 2 percent last year.

“The concern right now is economic growth,” Luz Lorenzo, an economist at ATR-Kim Eng Securities Inc. in Manila, said before the report. “That is what the government is addressing by spending more.”

The Philippines will keep its borrowing program for this year and is considering a debt swap for liability management, Treasurer Roberto Tan said in a briefing in Manila today. The government will consider other fundraising options aside from its regular auction, and the Bureau of the Treasury will follow market rates in deciding on auctions, he said.

To contact the reporter on this story: Max Estayo in Manila at

To contact the editor responsible for this story: Stephanie Phang at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.