Manila (13 February) -- President Gloria Macapagal-Arroyo said today that her administration could have notched a balanced budget, possibly even a budget surplus, last year.

But she said "we decided to take the opportunity of our good fiscal position to provide for a higher spending especially for infrastructure to sustain a high growth in 2008" to cushion the impact of the expected slowdown of the global economy this year.

The national government deficit last year was P9.4 billion, the lowest yearly deficit for the country since 1986 when recording of the country's annual fiscal position began.

The 2007 deficit of P9.4 billon was far below the government's deficit target ceiling for the year of P63 billion.

"We could have had a surplus or a balanced budget if we wanted but we decided to take the opportunity of our good fiscal position to provide for higher spending especially for infrastructure to sustain a high growth in 2008," the President said in her message during the 2nd GeneraL Assembly of the League of Provinces held this morning at Villa del Ray in Pili, Camarines Sur.

She pointed out that seven years ago, no one thought a balanced budget was attainable, or cut down on revenue cheats, strengthen the peso and move the stock market.

"No one thought we could bring our budget close to balance, lower our national debt and raise employment. But we have," she said.

The deficit accounted for 0.1 percent of the country's gross domestic product compared to the government's target ceiling of 0 0.9 percent of GDP or P63 billion.

The President added that the P9.4 billion budget deficit posted last year was the lowest in 10 years and equivalent to just 15 percent of the programmed deficit for the year.

"Funds were disbursed to government owned-and-controlled corporations and government financial institutions for pump-priming activities and to allow additional contributions from them in 2008, including dividends," she said.

The President had earlier said that for the Philippine economy to ride out the adverse effects of the weakening US economy in developing economies, the government's continuing priority is to generate the resources necessary to support higher levels of investments in infrastructure and essential social services.

The Arroyo administration aims to balance the budget in 2008, two years before the President's term expires.