IMF to send team to RP as part of MCC grant

MANILA, Philippines - The International Monetary Fund (IMF) is set to dispatch a resident advisor to the Bureau of Internal Revenue (BIR) and other short-term technical assistance missions to the Philippines to provide capacity-building support for the reform and modernization of the country’s tax administration.

The IMF announced yesterday that it has entered into a partnership agreement with the US Government’s Millennium Challenge Corp. (MCC) to help the BIR improve its revenue administration policies and procedures.

Under the IMF’s first agreement of this kind with the United States, MCC would contribute $4.6 million to pay for a resident advisor to the BIR and a significant number of short-term technical assistance missions by IMF experts to assist with a wide variety of technical tax administration issues.

“Today’s agreement is a milestone. This is the first technical assistance agreement between the IMF and the US Government. The agreement will serve as a solid foundation for success in reforming the Philippines Bureau of Internal Revenue, as well as a solid foundation for productive collaboration between the IMF and MCC,” MCC vice president Patrick Fine.

As part of the agreement, an IMF assessment mission would travel to the Philippines in November and that the resident advisor may be in place and engaging with the BIR before the end of 2010.

Likewise, the IMF would also submit an annual report to MCC on the BIR’s commitment to reform beginning in early 2012.

The IMF said the funding is part of MCC’s $434 million po-verty reduction compact with the Philippines that includes a $54.3 million investment to computerize and streamline business processes in the BIR. The 40-month project would bolster the effectiveness of revenue collection and reduce opportunities for corruption.

IMF Deputy Managing Director Murilo Portugal said the agreement would set the stage for a strong partnership between the IMF and the US government.

“We warmly welcome the United States as a donor to the Fund’s technical assistance program. We are looking forward to working together for the benefit of the Philippines,” Portugal said after the signing ceremony in Washington.

MCC is a US government agency designed to work with developing countries and is based on the principle that aid is most effective when it reinforces sound political, economic, and social policies that promote poverty reduction through economic growth.

President Aquino signed the $434 million MCC grant for poverty alleviation during his visit to the US last month.

Aside from the $54.3 million in investments to computerize and streamline business processes in the BIR, the project also covers $120 million to expand the government’s Kalahi-CIDSS project, a community-based, rural development program.