Finance Secretary Cesar V. Purisima said that the increase in the budget deficit in January to June this year was due to capital outlays for fast-tracked infrastructure projects, subsidies to government agencies and funds for El Niño mitigation activities.

In a statement, the Department of Finance chief said the programmed deficit ceiling of P145.2 billion was exceeded after expenditures in the first semester of the year totaled to P642.1 billion, higher by P45.1 billion than the P597.1-billion program.

Initial data coming from the Department of Budget and Management would show that the major sources of overspending are infrastructure and capital outlays, which surpassed program by P33 billion due to fast-tracked implementation of projects intended to be completed this year, and funds allocated for the supply of potable water to waterless municipalities

Spending for maintenance, operating and other expenses was also higher by P22 billion due to the release of funds for the El Niño mitigation activities to assist farmers and fisherfolks affected by the dry spell, for the financial subsidy to LGUs, for the activities of PNP in order to sustain peace and order, and the frontloading of funds for the 2010 Census of Population and Housing.

Subsidies to state-firms also exceeded the program by P1.7 billion on the account of the P1 billion release to the National Transmission Corporation for the acquisition of connection assets constructed by Hanjin Heavy Industries and Construction-Philippines in Subic and the advance release for the price stabilization program of the National Food Authority.

However, there was some savings in personal services of the government, which amounted to P10.6 billion that came from lower-than-programmed claims from retirement gratuity and terminal leave benefits and savings from lump sum item.

There is also underspending in interest payment amounting to P17.3 billion due to lower than expected foreign exchange rate and domestic interest.

Some P3.3 billion underspending was also registered under net lending due to reprogramming of advances to state-owned companies towards the year-end.

Lower spending for capital transfers to LGUs stemmed from the slowdown in the release of special shares of local government in the proceeds of national taxes amounting to P1.3 billion as a result of the delayed submission of certifications from collecting agencies.