By MAX ESTAYO

The government may be able to balance its budget this year, one year ahead of schedule after a lucrative asset sale boosted the November budget surplus to a whopping P54.1 billion.

Finance secretary Margarito Teves said that a record P90.6 billion was raised from privatizations in the first 11 months of the year.

Should the government be able to balance the budget, it will be the first time in 10 years.

"We are looking at a much reduced deficit and maybe there’s a fighting chance, let’s see, let’s hope, we might even end up with a balanced budget," Teves said.

This year’s budget deficit target is P63 billion but after booking nearly P58.5 billion from the sale of a majority stake in the geothermal firm PNOC-Energy Development Corp. last month, it has a surplus of P12.6 billion for the first 11 months.

Teves said the P12.6-billion surplus for the first 11 months was "the highest to date." It was a reversal from the P58.3-billion deficit incurred last year and the P55-billion deficit expected for the first 11 months this year.

In the meantime, the P54.1 billion was a turnaround from the P5.8-billion deficit same month last year and was way above the P2.7-billion surplus expected for the month this year.

The government has relied on asset sales to boost revenues and plug the deficit although rating agencies have criticized the strategy as being "unsustainable."

The record surplus in the first 11 months was achieved amidst a modest growth in tax revenues and expenditures, Teves said.

Total revenues reached P1.04 trillion, up by 18 percent from last year while expenditures rose by 10 percent to P1.03 trillion.

The Bureau of Internal Revenue collected P647 billion, up by nine percent from last year and the Bureau of Customs, P192.1 billion, up by six percent from a year ago.

In November, revenues rose by 71 percent to P148.3 billion and expenditures by a mild six percent to P94.1 billion.

The BIR collected P72.3 billion, up by 18 percent from last year and the BOC, P20.3 billion, up by 25 percent from last year.

The BIR and BOC have full-year targets of P765 billion and P228 billion, respectively.

The impressive headline numbers failed to move Philippine assets and analysts said the performance was unlikely to be repeated next year as Manila had sold many of its main big ticket assets and would have to rely more on squeezing collections out of reluctant taxpayers in 2008.

"Next year, the onus to push (tax collections) growth supportive of fiscal policies will be great, especially with the authorities’ optimistic growth target," said Christy Tan, economist with Bank of America.

The stock market finished down 0.53 percent and the peso was quoted at 41.93 against the dollar, weaker than Monday’s close of 41.655.

Philippines’ overseas bonds were unmoved.

The Philippines has been struggling to tackle widespread tax evasion and official corruption but in a positive sign, the country’s main tax agency, which provides two thirds of government revenue, met its collections target in November, the first time in four months.

"I think tax collection will be better next year," said Luz Lorenzo, economist with ATR-KIM Eng Securities.

"Tax collection has to improve. To date there has been a slight improvement because tax revenues to GDP for the nine months is at 14.4 percent and last year for the full year it was 14.3 percent."

The Philippines relies heavily on foreign and domestic debt to fund its budget shortfalls and this year’s improving finances have helped Manila halve its overseas commercial borrowing requirement to $500 million for next year.

The government also wants to rely more on domestic borrowings next year to help stem the rise of the peso, up nearly 17 percent against the dollar so far this year.(with reports from Reuters)