Pork Barrel Politics Equals Higher Fiscal Deficit

Substantial expenditure pledges in the run-up to the presidential elections on January 26 have prompted us to revise up our nominal fiscal deficit forecast for 2010 from 6.3% to 6.8% of GDP. In addition, with the economic recovery expected to be gradual, we see the fiscal deficit coming in at 6.3% in 2011, substantially higher than the targeted 5.0%.

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