Nov. 5--THE Department of Finance (DOF) finally admitted that the government would breach its budget deficit ceiling this year even if it could dispose of two big-ticket assets. "Yes, even if we sell Philippine National Oil Co.-Exploration Corp. (PNOC-EC) and Food Terminal Inc. (FTI), because of typhoons Ondoy and Pepeng, we are likely to breach P250 billion," Finance Secretary Margarito Teves told reporters during a briefing.

According to him, the worst-case scenario is that the fiscal gap would "probably hit about P300 billion."

"For the Bureau of Internal Revenue [BIR] targets, we will give the new commissioner [a] chance to respond under the worst-case scenario. But we also have [a] scenario wherein we can dispose of at least one of two big-ticket items and get a favorable decision from the Supreme Court on San Miguel Corp. [SMC] shares," Teves said.

President Gloria Arroyo on Tuesday appointed Joel Tan-Torres to replace Sixto Esquivas, who resigned from the BIR portfolio.

Separately, the World Bank said the Philippines' budget deficit this year would hit 3.8 percent of gross domestic product (GDP), or higher than the government's target of 3.2 percent.

"We expect a slightly higher deficit than what the government is projecting. But it is still within the reasonable level," Eric Le Borgne, senior economist of the World Bank told reporters.

For next year, the lender said the fiscal gap would narrow to 3.1 percent of GDP.

GDP is the amount of final goods and services produced in the country, while the deficit-to-GDP ratio is a key measure of how long the government can sustain revenue shortfalls.

The bank also said the government will likely miss its balanced budget target by 2013. For 2011, the bank expects the Philippine fiscal deficit to hit about 2.7 percent of GDP, before easing to 2.6 percent and 2.4 percent in 2012 and 2013, respectively.

The World Bank projections exclude privatization receipts.

Sale of San Miguel 'a big factor'

"We can hit the target," Teves, however, said, provided that the privatization of "small-ticket Fujimi property [is] still there, if this is available."

Even if it disposes of the 103-hectare block in FTI and shares in PNOC-EC, the government would breach the budget deficit if it fails to "get a favorable decision on the [SMC] shares," the DOF chief said.

"SMC is a big factor. It has P50 billion in contribution. Without that--considering Ondoy and Pepeng--we are going to breach [the] P250-billion program," he said.

The government shares include 446,452,536 "A" shares and 307,395,776 "B" shares.