Finance secretary Margarito Teves yesterday said the government is looking at a worse-case scenario budget deficit of P300 billion from the current "difficult- to-defend" P250 billion target representing 3.2 percent of the gross domestic product.

Teves said he is finding it "extremely stressful and extremely difficult" to contain the targeted funding shortfall, considering the additional spending required for typhoon rehabilitation efforts and delays in privatization of state assets.

"In a worse-case scenario, of course, the deficit could reach P300 billion. But it remains as a worse-case scenario. We are sticking with our programmed deficit," he said.

A P300 billion deficit, representing 3.96 percent of the GDP, has long been forecast by most foreign banks, multilateral creditors and global credit rating agencies.

The budget deficit is to expand by at least P12 billion, representing the supplemental budget Congress is expected to pass to fund rehabilitation efforts in the wake of typhoons "Ondoy" and "Pepeng."

Teves said no matter how difficult it is, the finance department and the rest of the economic team are sticking to the P250 billion ceiling, which is now in its third revised form.

He said the deficit scenario will hopefully get a boost with the privatization of three more assets in the last quarter led by Food Terminals Inc. (FTI).

Last week’s bidding for FTI was declared a failure after no one showed up to bid. As a result government is looking at a negotiated sale.

The government expects to raise P30 billion from the privatization of FTI, sale of a 40 percent shareholding at PNOC-EC and the lease of the Fujimi property in Japan.

The government also wants to sell its contested shares in San Miguel Corp., valued at P50 billion, but needs Supreme Court approval to do so.

"We want to continue selling assets," he said.

Teves likewise indicated continued discussions on visiting the global capital markets for the third time for a possible $500 million bond float.

He said plans are firming up to tap the Japanese capital markets for $500 million to $1 billion in yen-denominated bonds that would be guaranteed by Japan Bank for International Cooperation (JBIC).

The government earlier reported that it is nearing closing a deal on lowering the guarantee fee being charged by JBIC in exchange for providing 95 percent risk cover for the Samurai bond float.

Teves earlier said the preferred route is to launch global bonds in the remaining months of the year while deferring the Samurai float to early next year.

The finance chief also expressed doubts full-year growth target of 0.8 percent to 1.8 percent could be achieved, saying the devastation wrought by the typhoons could push back the GDP growth rate to a range of 0.6 percent to 1.6 percent from the current target range of 0.8 percent to 1.8 percent.

Teves estimated the damage caused by Ondoy and Pepeng at between P12 billion to P14 billion.

According to him, a damage of P7 billion is enough to bring clip 0.1 percent from the growth rate.

The country grew by a disappointing 0.4 percent in the first quarter but recovered slightly in the second quarter with a growth

of 1.5 percent.

The second quarter GDP performance prompted foreign banks and global economic think tanks to tweak their growth forecast to between 1 percent and 3 percent.

Teves said dollar remittances from Filipinos abroad may still help the government achieve better growth rates after rising to $1.5 billion in July from $1.4 billion in the same period in 2008.

The Bangko Sentral ng Pilipinas (BSP) said dollar remittances from overseas workers could reach $17.1 billion from $16.4 billion last year or an expansion of 4 percent.

Teves said another "compensating factor" is the plan to seek multilateral help for typhoon relief from donor agencies attending the 2009 Philippine Development Forum (PDF) in the middle of November.

"We’re going to convert the PDF into a pledging session and seek the help of multilateral agencies," he said.

The DOF has been assigned as lead agency in the reconstruction commission that the President created to focus on raising funds or donations from the international community.

In the coming PDF forum, Teves said, the government may enter into bilateral agreements for "donations in kind" and seek grants and financial aid from multilateral lenders.

The government’s budget deficit has swelled to P210 billion as of end-August, only P40 billion shy of the full-year programmed ceiling and almost seven times more than the P31.7 billion deficit incurred in the same period last year.