IMF airs concern over RP’s ability to sustain revenue collection

The International Monetary Fund (IMF) is concerned over the country’s ability to sustain its revenue collection as against its ability to contain fiscal spending.

The Philippines is looking at a budget deficit of P145 billion this year and P130 billion next year. The ability to meet its deficit targets will give the Philippines a positive outlook among foreign investors and international lenders.

However, the IMF’s is concerned that the country’s tax collection while showing signs of improvement, may not be sustained. On the other hand, the government seems to have reached the limits of its spending cuts.

Fiscal spending was held down to P64.10 billion, or 6.2 percent lower than the projected P68.3 billion from January to October this year.

The Bureau of Internal Revenue (BIR) reported a P320.203 billion collection from January to October this year, or P2.933 billion off the mark. Government set first 10-month collections at P323.136 billion.

"What people are looking for are visible signs or evidence that there are measures in place designed to bring down the fiscal deficit," said Charles Adams, IMF assistant director, regional office for Asia and the Pacific.

Adams said they are not overly concerned if the deficit target was overshot. He said the more important concern is why it was overshot and where the fault lies.

"The country’s concern is bringing down the fiscal deficit on a sustained basis, and if there is an overshoot of the deficit targets, the common response is that why that overshoot occurred," he added.

The IMF official said that government should work closely in improving revenue collection on a sustained and long-term basis as the major issue for meeting its annual budget targets.