RP hailed for success in its fiscal reforms

The Philippines' partners for international development lauded the government for its successful fiscal reforms that resulted to an unprecedented three consecutive years of economic growth since 1970.

World Bank country director Joachim von Amsberg said in their two-day development forum in which they reviewed the Philippines' progress and plans to accelerate broad-based growth through sustained reforms and higher investments, they acknowledged major progress in the country's fiscal management.

Wearing an aquamarine suit, the beaming President Gloria Arroyo thanked all the country's development partners for their continued support.

"We are on the right track every single day, working with our team to cut the red tape, build the digital and physical infrastructure as well as a strong energy grid nationwide and rationalize the incentives to pull in massive investments to create jobs and beat poverty," the president said.

She added that through the strong international alliances, the country received billions in investments that helped create five million new jobs and strengthened the military and security alliances in the region.

"We hope for the day when enough good jobs are created in the Philippines so that hard working Filipinos don't gave to go abroad for their work. We see a day when going abroad for a job is a career choice, not the only option for work," she further said.

Amsberg, who sits as co-chairman of the Philippine Development Forum, said the successful implementation of the Expanded Value Added Tax in 2006 has raised the tax effort significantly for the first time in a decade. He added that the ongoing turnaround in public finance has opened a credible path to fiscal sustainability.

"Madam president, we congratulate you for the economic management and performance of this government under your leadership," Amsberg told Arroyo, who was the guest of honor during the culmination of the two-day meeting at the Marco Polo Plaza Hotel.

Amsberg said the benefits of the fiscal reforms are clearly apparent from the lower interest costs and borrowing spreads, the strength of financial markets, lower inflation and the surge in foreign direct investments.

He said last week's global equity sell-off highlighted the importance of the country's fiscal adjustment

Armsberg said they welcome the Philippines' plans to address these three challenges: overall investment rate in the Philippines, which, at 15 percent of Gross Domestic Product, represents an extraordinary low level, raising questions about sustainability and achievability of higher growth; unemployment and poverty that remain high despite growth; and growth whose benefits are not yet sufficiently shared across sectors, regions and community.

Amsberg said the government intends to address these challenges through fiscal reforms and favorable international environment, creating a window of opportunity for actions that can translate recent financial improvements into higher investments, more jobs, increased incomes and more rapid poverty reduction.

Amsberg said that to sustain and deepen fiscal reforms and improve efficiency and governance of public spending, it is important to increase public investment while meeting the fiscal targets through further increases in the tax effort.

He also said the government should boost administrative effort by the Bureau of Internal Revenue through monitoring targets under the ongoing tax reform administration group and should ensure that high profile cases under the Run After Tax Evaders and Run After The Smugglers would be successfully prosecuted.

It is also important that government agencies should link their respective databases.

"The government has laid out very clear and very credible plans for using the current window of opportunity and translating financial improvements into higher investments and poverty reduction," Amsberg said.

He added that if these plans are implemented, he is expecting that investment rate will begin to rise, more jobs will be created, income will rise and poverty will fall.

The next PDF meeting is set for 2008. - Fred P. Languido and Mitchelle L. Palaubsanon/LPM