The Philippines’ lower house of Congress during the first week of November, announced its approval of an 8% increase in government spending next year. Prospero Nograles, head of the 268-member House of Representatives, described the budget as “a tool to recovery and reconstruction” after successive typhoons destroyed crops and infrastructure worth more than 38 billion pesos, and the increase is said to be aimed at  funding more social and infrastructure projects.  Voting 175-6, lawmakers approved the government’s proposed 1.541 trillion pesos for 2010, which reflected Manila’s efforts to rein in the budget deficit. The spending plan, which was smaller than the near 15 percent increase in 2009, assumes a budget deficit of 233.4 billion pesos or 2.8 percent of gross domestic product, as the government assures that the country would largely exceed its deficit target of 250 billion this year. Manila has abandoned its goal of balancing the budget in 2008 so it could spend more on infrastructure and social services to help shield the economy from the global downturn.

However, the International Monetary Fund (IMF) has expressed its concern over the Philippine government’s budget deficit blowout. An government official said in anonymity that the concern was aired during a meeting between visiting IMF officials and fiscal as well as monetary authorities last week. In the meeting, the official said the IMF team sought an explanation from fiscal authorities on how they planned to proceed with the fiscal consolidation plan aimed at achieving a balanced budget by 2013. “It looks like they (IMF) haven’t been able to see clearly what national government will do with the deteriorating ratios. Including how to lift tax collection and reduce the deficit,” the official said. The team, according to the official, also raised the issue about the government’s deteriorating tax effort as revenue collections of both the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) continued to fall below expectations.

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