WB urges RP to pass ‘pay-as-you-go’ law

The World Bank is urging the government to legislate the so-called "pay-as-you-go" scheme that would require Congress to legislate revenue measures before legislating measures that would increase expenditures.

The proposal would effectively put the responsibility on Congress to ensure that every new legislation that would increase expenditures would be accompanied by a corresponding legislation creating revenues to fund it.

The WB proposal comes as Congress deliberates the proposed Financial Sector Reform Program Loan designed to streamline the bureaucracy and clean up the government’s fiscal program.

The WB suggested that the Philippines consider the model set by the US when it faced a similar fiscal crisis in the late 1980s and early 1990s.

At that time, the US Congress passed the Budget Enforcement Act of 1990 which was an offshoot of the US Balanced Budget and Emergency Deficit Control Act of 1985.

These two laws prevented the US Congress from legislating any new law that would have an impact on expenditures unless it also legislated a corresponding measure that would create revenues to fund the increment in spending.

Prompted by the WB proposal, the Department of Finance (DOF) and the Department of Budget Management (DBM) are packaging a similar "pay-as-you-go" legislation. – Des Ferriols