Two of the three international credit rating firms urged the Philippine government to return to the fiscal consolidation program, the Department of Finance (DoF) said.

Finance Secretary Margarito B. Teves, said any upgrade in Philippines' credit ratings by Fitch Ratings and Standard & Poor’s Ratings Services depend on the government's revenue performance.

“All the international credit rating agencies have a consensus on things to be done, they're concern about revenue eroding measures, and they're concern whether we will go back to the fiscal consolidation path as soon as possible,” Teves told reporters.

S&P recently raised concern over the country’s plan to narrow the budget deficit, citing it is not clear as the Arroyo administration prepares for the national elections next month.

“I think what they are interested to see is a commitment on the part of the new administration that they will go back to the root of fiscal consolidation and those commitment will have to be manifested by additional revenues, through a combination of revenue enhancement measures, new measures and improvement in tax collection efficiency,” Teves added.

Despite the huge financial gap in the first three months of the year, Teves said the Philippines is sticking to its P293.2 billion deficit target for this year and there are no plans for additional borrowing for now.

Budget Secretary Joaquin C. Lagonera had said the government's spending in the second-quarter is expected to be lower than the P400 billion incurred in the first-three months of the year.

Lagonera explained this is due to the impact of the election ban that will be in place until the middle of May and conservative spending levels linked to the continued close monitoring by the government of revenue patterns.

In the first quarter of the year, government spending represents 25.4 percent of the total budget for the year. The end-March disbursement share in 2010 was slight 0.4 percentage point higher than that recorded for the same period last year.

The national government incurred P134.2 billion budget deficit in the first three months of the year due to frontloading for capital projects intended to cope with the negative effects of El Niño and ongoing infrastructure projects.

At end-March, the financing gap is 12 percent higher compared with the P119.7 billion in the same period last year and higher by 23 percent against the P110.9 billion target for the period.

Total revenues in January to March amounted to P265.8 billion, slightly below the programmed collection of P266.3 billion.

Total expenditures for the period reached P400 million, exceeding the program by P22.8 billion, as savings on interest payment were offset by higher capital spending mostly for reconstruction, road rehabilitation and the neutical highway projects.

In March alone, the budget deficit amounted to P63.9 billion, or 21 percent higher than the program than the deficit incurred during the same period last year.