Department of Finance pushes fiscal responsibility measure

MANILA, Philippines - The Department of Finance (DOF) has stressed the need to pass the so-called Fiscal Responsibility Measure, saying that this would help address the country’s fragile fiscal position.

In a position paper on Senate Bill 2480 or an Act Instilling Fiscal Discipline in the Public Sector by Establishing Deficit-Neutral Rules in Line with the Principle of Responsible Financial Management and Towards Promoting Sustainable Economic Growth, the DOF said the passage of the measure is very urgent.

“Fiscal responsibility is seen as an urgent need especially at this point when the Philippines is constantly incurring huge fiscal deficits, projected to reach P325 billion or 3.95 percent of gross domestic product (GDP) by 2010, together with a continuous run up on government debts which have reached high levels,” the Finance department said in its position paper.

The department noted that in recent years many revenue-eroding laws have been passed by Congress which negated gains from the passage of the Reformed Value Added Tax (RVAT) law in 2005.

“The proposed bill introduces a framework of burden-sharing between the executive and legislative branches of government in making sure that only deficit-neutral legislation shall be enacted. It will also help foster an atmosphere of mutual cooperation and respect between them,” said the DOF.

Furthermore, the department said that the deficit-neutral policy proposed under the bill would set out obligations to cut the current deficit at “an appropriate and sensible pace and it will allow us to protect whatever gains the economy has achieved.”

“We would like to encourage the 15^th Congress to act favorably and expeditiously on this proposed measure,” said the DOF in its position paper.

The Senate bill, filed by Senator Franklin Drilon, proposes that public spending which results to an increase in deficit or reduction in revenue, whether it is a mandatory spending legislation or any tax legislation, should and must be accompanied by a countervailing measure which offsets it.

The Aquino administration is staring at a widening budget gap that is projected to hit P325 billion this year.