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AN
economic think tank has advised the government to take
new structural measures in managing the fiscal deficit
other than focusing on the sale of public assets, to
avoid losing the confidence of the international
business community.
Dr.
Cayetano W. Paderanga Jr., chairman of the Institute for
Development and Econometric Analysis Inc. (Ideas), said
the privatization of government assets will never be a
sustainable option in balancing the budget and spending,
and at best will just help “buy some time.”
A day
before, visiting International Monetary Fund (IMF)
managing director Rodrigo de Rato also reminded finance
officials of the unsustainability of privatization as a
revenue stream because of its one-off nature.
Even if
the government becomes successful in its privatization
efforts, Paderanga said their fruits will only be good
in helping meet deficit targets by up to next year.
Among
others, the government plans to sell its shares in
Meralco, San Miguel, PNOC and FTI.
After
this, Paderanga said the government should have already
put in motion new structural measures to keep the
deficit in check, even as it continues spending on
infrastructure projects.
Instituting new tax measures, Paderanga said, is no
longer a viable option since the lawmakers will not
likely push more of them, especially with the defeat
suffered by Sen. Ralph Recto, the author of the reformed
value-added tax law, in previous elections.
“Coming
up with new taxes will not be easy,” he said.
Paderanga said one remedy is for the government to draw
up mechanisms to increase administrative efficiency,
specifically in revenue collection.
Paderanga said the state could also cut down on public
spending as its major driver of growth. He said the
increased confidence the country now enjoys from foreign
investors is largely due to the proper management of the
fiscal deficit.
“The
government was able to show that the deficit is not
getting out of control,” he said.
This,
however, is no longer the case now: from January to May,
state overspending reached P42 billion, uncomfortably
near the full-year deficit target of P63 billion.
Experts
cited the huge government spending in the initial months
as the main driver of the 6.9-percent first-quarter GDP
growth.
With
this, Paderanga agreed with other analysts that the
January to March economic growth cannot be sustained for
the whole year since the government will have to cut
down on its spending.
He said
for the whole year, the GDP will likely settle at 6.4
percent, especially with agriculture also not seen to
sustain its first-quarter performance due to the
drought.
“But
let’s not lose sight that the growth rate will be higher
than last year,” he said. |
