The Arroyo administration was able to log a P12.6 billion budget surplus in the first 11 months of 2007, mainly through revenues generated from the privatization of government assets. But with not much left for the government to sell, new taxes and a budget deficit are likely in 2008, according to independent think-tank Foundation.
According to IBON research head Sonny Africa, the Arroyo administration’s privatization revenues of P90.6 billion in 2007 was the highest in the country’s recent history. Even the privatization frenzy under the Ramos administration generated just P71.4 billion from 1992-1997. Total privatization revenues for the past fifteen years prior to 2007 was P93.9 billion, he said.
However, government is running out of assets to privatize, meaning that imposing burdensome taxes similar to the RVAT is possible in 2008, Africa said. At the rate the government’s revenue effort is going, without such one-off privatization revenues, government faces a budget deficit of P82.3 billion this year.
Government could avoid fiscal problems this year through a determined crackdown on large-scale corruption and corporate tax evaders, Africa said, but this seems unlikely given the Arroyo administration’s track record. It could also reverse its trade liberalization policies by increasing tariffs on imports. It could also cut back on allocations for debt service, defense and patronage spending, but both moves again are doubtful.
Its only other option is some creative way of advancing revenues, but again this would be merely buying time. Said Africa : “Without a change of economic policies, Pres. Arroyo may soon run out of options.”