Moody's asks how RP plans to address fiscal problems

MANILA, Philippines - Moody’s Investors Service (Moody’s) yesterday quizzed Philippine fiscal authorities on the country’s fragile fiscal position and asked for contingency measures on how the government plans to address the problem.

A Moody’s team is in the Philippines as part of the credit rating agency’s regular assessment on the country’s monetary and fiscal environments.

In its meeting with Moody’s representatives, a government team led by Finance Secretary Margarito Teves stressed that the government is committed to continuing on with its fiscal consolidation path after being sidetracked last year because of the global financial turmoil and the two typhoons that hit the country.

These developments required the government to spend more to pump-prime the economy and lessen the impact of the recession, resulting in a wider-than-expected budget deficit.

As of end-November 2009, the government’s deficit had already widened to P272.5 billion. For the whole of last year, the budget deficit was expected to have hit P290 billion, above the program of P250 billion.

During the meeting with Moody’s, fiscal authorities also said that the government would continue to work on increasing tax compliance and enforcement, strengthening governance measures and improving customer service of our revenue agencies.

Furthermore, the Finance team said the government would also be more vigilant in monitoring the so-called revenue-eroding measures and maximize non-tax revenues such as proceeds from privatization, dividends from government-owned and controlled corporations as well as fees and charges.

According to estimates made by the Department of Finance, roughly P60 billion are lost yearly because of these so-called revenue-eroding measures.

The government also committed to strengthen the Run After Tax Evaders or (RATE) Program, the tax-evasion program of Bureau of Internal Revenue (BIR).

Early this week, Moody’s retained its “stable” outlook on the Philippines, citing the developing economy’s financial system and external liquidity which remained healthy despite the global turmoil.

In its latest report entitled “Asia Pacific Outlook” Moody’s said the Philippines was one of the better performers in the region as far as keeping a comfortable external liquidity level was concerned.