Fitch: Philippines misses deficit target

Fitch Ratings said the Philippine national government's fiscal performance was disappointing in the first half of 2007, and the official deficit target of PHP63 billion is unlikely to be met.

Based on year-to-date results, the agency said it revised its 2007 deficit forecast to PHP125 billion (excluding privatization), equivalent to 1.9% of GDP.

Fitch said the positive momentum behind the country's fiscal performance in recent years faltered badly in early 2007, particularly with respect to tax collection. With real economic growth expected to have averaged about 6.5% in the first half of the year, the 3.4% increase in tax receipts was rather poor, the agency said.

The agency said optimism regarding revenue prospects in the short term is unwarranted, since various measures to improve tax collection and reduce evasion have been in place for some time, without meaningful results.

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