In his courtesy call to President Arroyo at Malacañang, ADB president Haruhiko Kuroda expressed concern over the government’s fiscal position.
The President said she hopes that the Senate would approve the Malacañang-backed 12-percent expanded value-added tax (e-VAT) that is expected to raise P80 billion in fresh revenues.
Kuroda was named ADB president last February.
"Preeminent among the activities that need addressing is the fiscal imbalance and everybody agrees on that," ADB country director Thomas Crouch told The STAR. "I guess to a certain extent, many of us are impatient for some rapid developments along that line, because unless we can fix the fiscal imbalance, other priorities cannot be pursued."
Crouch said the ADB would also like to see rapid progress in the government’s privatization program, particularly in the power sector.
"We are committed to help the government in moving the reform agenda," he said.
In response to Kuroda’s query on the country’s security situation, the President replied that huge strides are being made in the government’s counter-terrorism effort and that there is better intelligence fusion among various law enforcement agencies.
Among the other issues tackled during the meeting, Crouch said, was Mrs. Arroyo’s 10-point agenda, which he said the ADB would strongly support.
He said ADB’s "forward-looking strategy" takes into account the government’s 10-point agenda and that development programs would be "closely-aligned" with the same. "We will ensure that any project we will pursue will be explicitly linked with the 10-point agenda."
The President’s 10-point agenda includes the creation of six million jobs in six years, balancing the budget, construction of more classrooms, and provision of water and electricity to all barangays as well as forging lasting peace with various rebel groups.
In its report last week, the ADB had forecast a steady five percent growth for the Philippines in the next three years.
But the ADB said it sees the fiscal deficit as "a significant imbalance" in the economy.
"The government is unable to fully mobilize revenues either through taxes, tariffs, fees or charges so it resorts to borrowings," the ADB said. "While some tax measures have been passed or are under deliberation, revenue collection is inadequate to fund the budget and to improve public infrastructure."
It said the government needs to raise P90 billion in new taxes to cut its dependence on borrowings.