Government sticks to medium term deficit, debt targets

MANILA, Philippines - The Aquino administration is sticking to its medium term targets of reducing its deficit and debt through reforms in tax administration, enhancement of revenue collections, passage of revenue-related priority bills, and putting in place anti-corruption measures.

The government already scored a major victory with the recent passage of the excise tax reform on alcohol and tobacco products into law, in which the government expects to earn billions of pesos.

In its latest Socio-Economic Report (SER) 2010-2012, the National Economic and Development Authority (NEDA) said the National Government remains committed “to bring down the deficit and debt to manageable levels.”

However, other priority bills, designed to simplify the tax system, remove unnecessary incentives and close loopholes, still need legislative action. These include simplified net income taxation scheme, strengthening the anti-smuggling provisions of the tariff and customs code, the customs and tariff modernization act, and the fiscal incentives rationalization bill.

According to the report, the Bureau of Internal Revenue (BIR) will continue to enhance revenue and collection efforts through programs that eradicate avoidance and improve collection efficiency and audit through better computer assisted systems and investigative tracking that aim to penalize the erring.

The Bureau of Customs (BOC) for its part, plans to continuously operate its automation innovations for faster valuation data exchange, facilitate computerized operations-related information, and then ensure greater involvement of the private sector in combating smuggling.

The recent under-spending forced the government to undertake several measures to make up for lost opportunities.

These include: proper resource usage through appropriate disbursement report assessments; transfer of resources from slow to fast moving programs; and procurement reforms allowing agencies to see available resources and orders in real time, through a common portal for government procurement.

 â€œThe government will continue to increase spending, particularly for priority sectors, which simultaneously will allow it to meet the Millennium Development Goals and bring the spending levels for infrastructure, education and health to more respectable levels, comparable with other Asian countries,” the report said.

To reduce its debts, the government is pursuing its three medium term objectives, meet financing requirement at minimal costs consistent with an acceptable level of risk; reduce national government foreign currency denominated debt; and further support the development of the domestic and capital market.

The government would also continue to reduce its dependence on foreign currency denominated debt while the maturity profile of national debt will be lengthened through bond exchange to mitigate risks associated with refinancing or roll-over issues.

Moreover, it shall adopt greater transparency and predictability in debt issuances and management, and will consolidate debt management in order to include other public sector entities.