The government, based on preliminary numbers, was able to contain public sector borrowing to a deficit of P300 billion for 2009 or 3.8 percent of gross domestic product (GDP), lower than programmed of P314.3 billion, despite the higher-than-expected budget gap.

In some countries, public sector borrowing requirement (PSBR) is also known as the budget deficit. When government expenditures exceed income, the result is PSBR and this deficit is financed by state borrowings.

“It’s a crucial public sector finance indicator,” said Finance Undersecretary Gil S. Beltran. “In accounting for it you have to net out SSIs (social security institutions) and LGUs (local government units).”

For 2010, the PSBR program is P299.3 billion.

The latest PSBR figure released by the Department of Finance was for the first quarter of 2009, which was a deficit of P103.85 billion or six percent of GDP, bigger than what was reported same time in 2008 of P40.19 billion.

The consolidated public sector deficit (CPSD), also as of the first quarter of 2009, was P47.29 billion or 2.7 percent of GDP.

Beltran said the CPSD for 2009, which had been programmed at P233.9 billion or three percent of GDP likely was “met” or within target. For this year, the emerging CPSD is P210.18 billion, equivalent to 2.5 percent of GDP.

Both CPSD and PSBR are reported at the same time under the consolidated public sector financial position. PSBR includes National Government, central bank restructuring, monitored government-owned and controlled corporations (GOCCs), net lending and equity to GOCCs and other adjustments.

Last year, government’s PSBR deficit amounted to P91.45 billion, equivalent to 1.2 percent of GDP, higher than 2007’s P47.9 billion or 0.7 percent of GDP.

PSBR increases vis-a -vis GDP since the government wants to increase public spending.

Finance officials explain that strong revenues and careful public spending will naturally reduce the need for the public sector to borrow.

PSBR occurs when public sector expenditures exceed government income. The deficit is then financed by borrowing or issuing government securities or bonds.

Based on government data for 2010, the central bank restructuring will amount to P15 billion, higher than last year’s program P14 billion while monitored GOCCs will borrow P62 billion compared to 2009’s P63.6 billion.