|
THE
International Monetary Fund (IMF), while lauding the
government for its efforts to shield the poor from
escalating fuel and food prices by preparing to spend
more than budgeted this year, cautioned it to make sure
it does not lose fiscal discipline and that tax
collection must continue to improve in parallel.
The
fund’s resident representative to the Philippines, Reza
Baquir, said at a press briefing, “The Philippines can
afford a small deficit in 2008 to protect the poor from
the consequences of rising fuel and food prices.”
Finance
Secretary Margarito Teves had earlier said the
administration has abandoned plans to balance the budget
this year—something the President had pursued vigorously
before the food crunch—and will allow for a deficit of
up to P75 billion instead.
Baqir
said maintaining fiscal discipline “would help assure
the investor community that the increase in the deficit
is temporary and that the government’s medium-term
fiscal consolidation program remains on track.”
He added
this means the tax effort, which averaged 14 percent of
GDP last year, must at least hit the target of 15.2
percent this year.
He also
said the government debt burden must continue to improve
to allow for fiscal space within which the government
can maneuver and deal with externally induced shocks.
“Due to
the successful implementation of previous fiscal
reforms, the debt burden of the nonfinancial public
sector has been reduced from over a hundred percent of
GDP in 2003 to an estimated 62 percent of GDP at
end-2007,” pointed out Baqir.
This
involves such public sector entities—as local government
units, for example—being able to revert from deficit
state to surplus and thus in a position to contribute to
overall fiscal health.
Baqir
agreed with government the 12-percent value added tax
helped in the improvement of the fiscal outlook,
“effectively putting at bay the then- looming fiscal
crisis that at that point in 2005 was a possibility.”
|
