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A DAY
after the UK-based Fitch Ratings doubted the
government’s ability to keep the deficit within the
P63-billion ceiling for the year and the Executive
endorsed a P1.227-trillion budget for 2008, Finance
Secretary Gary Teves dispelled skepticism over the
revenue woes and said their eyes were fixed on balancing
the budget by next year.
Still,
the Senate met his confidence with a question: Where’s
the road map for privatizing key State assets, proceeds
from which Teves relied on to plug the revenue
collection gaps?
According to Teves, the 2008 fiscal program will raise a
total of P1.236 trillion, more than enough to underwrite
only P1.227-trillion worth of public projects and
programs.
“This
means we will have a zero budget deficit or a balanced
budget by the end of next year,” he said.
Teves
had said the Fitch analysts disregarded the expected
hefty profits from the sale of State equity in prime
assets, but on Wednesday lawmakers dared him to outline
how exactly such privatization was to be carried out.
Senators
asked Teves to submit a detailed plan on how the Arroyo
administration aims to dispose prime State assets to
raise more revenues to meet its 2007 targets and
bankroll Malacanang’s megaprojects in so-called super
regions.
“In the
interest of transparency, Finance Secretary Teves should
reveal to the public what government assets will be
sold, to whom and for how much,” Sen. Mar Roxas said,
stressing that there is a bidding process to be followed
“which we cannot simply cut short just to include the
sale among 2007 revenues.”
He
reminded Palace officials that the planned auction of
government assets is a one-time option and both the
Bureaus of Internal Revenue and Customs under the
Finance department still need to come up with long-term
solutions to plug revenue-collection shortfalls.
“We
can’t have a flea-market type of hawking of state assets
just to plug the collection gaps of the BIR and BOC,” he
said in Filipino, noting that “selling assets is a
one-off deal.” Once done, he added, “you are left with
the perpetual problem of collecting proper taxes, which
can only be solved by better tax administration.”
According to Roxas, a clear financial plan to meet
revenue shortfalls would help assure foreign investors
and credit-rating agencies such as Fitch that government
fiscal targets for the year are indeed achievable.
“We do
want to meet these targets and everyone must pitch in to
help sustain our economic growth. But if our citizens
don’t know what the financial plan is, how can they
help?” he said.
He noted
that while President Arroyo enumerated a long list of
administration projects for the next three years in her
State-of-the-Nation Address before Congress last Monday,
the source of funding for this has not been clear.
“As in
any business, you have to consider both sources, and
uses, of funds. The uses were elaborated on in last
Monday’s Sona, but sources are still not well-defined,”
Roxas said as he pressed for greater transparency in
government transactions.
According to Teves, meanwhile, there should be enough
revenues next year to fund the proposed P1.227-trillion
budget.
President Arroyo in Monday’s Sona had sought
congressional support for P11.5 billion worth of
projects.
Assuming
the 2008 fiscal program does raise a total of P1.236
trillion, Teves said, the government potentially has
more revenues flowing next year to underwrite the
construction of an extra number of public infrastructure
without sacrificing the delivery of crucial services.
“With
these revenues, we will be able to fully fund the
P1.227-trillion budget for next year, including the
infrastructure projects mention by the President in her
Sona,” Budget Secretary Rolando Andaya said in reaction.
Andaya
previously told reporters the forecast budget surplus
after 2008 had been scrapped in favor of a zero-budget
scenario where the excess funds will help finance
hundreds of billions of pesos worth of ports, school
buildings and many others.
Teves
said revenue flows remain on track and still faithful to
the goal of balancing next year’s budget “despite recent
slippages in tax collection.”
Fitch
Ratings, headquartered in both London and New York,
noted that first-half revenue collection this year grew
by only 3.4 percent when in fact the local economy
expanded by an estimated 6.5 percent in the same period.
The
rating agency said optimism about revenues in the coming
months was misplaced as enhancement measures have been
put in place “without meaningful results.”
Still,
Teves said, the “combined revenues from both tax and
nontax sources” will allow the government to steady its
fiscal consolidation program, and noted the expected
proceeds from such nontax sources as the proceeds of
privatizing state assets.
Relatedly, a congressman branded as premature and unfair
Fitch’s poor assessment of fiscal performance mainly on
the basis of the higher budget deficit in the first
half.
Nevertheless, Nationalist People’s Coalition Rep.
Vincent Garcia of Davao City said the assessment should
be taken by revenue collection agencies and the
Department of Finance as a wake-up call to step up their
collection efforts.
“We
believe it’s not enough for Fitch Ratings or any other
rating agency for that matter to determine our fiscal
capacity merely on a quarterly basis. The country only
experienced a shortfall in the first half of this year,
which is just a temporary setback. We can do better in
the second half of the year with improved tax collection
and the privatization of more government assets,” said
Garcia.
He is
certain that the P41-billion budget deficit in the first
half can be compensated for, since the government has
been overhauling its revenue collection machinery by
shuffling people and dangling incentives for performers.
(With F. Marasigan) |
