|
THE Philippines’ fiscal reform effort has stalled,
according to the World Bank.
“Progress has stalled but has
not been reversed,” Joachim von Amsberg, the multilateral
lender’s outgoing country manager, said, adding the Philippines
has a narrow window to get its fiscal house back in order or risk
putting in jeopardy economic reforms that have taken years to put in
place.
A key supporter of President
Arroyo’s economic reform agenda, the World Bank is starting to
show some “concern” over recent revenue shortfalls, von Amsberg
said, adding the government must “put its energies” to repairing
the gaps so that “in the next six months the tax to GDP [gross
domestic product] ratio is increasing again,” an “important
signal” to investors.
Mrs. Arroyo sacked the head of
the Bureau of Internal Revenue, the government’s main tax
collection agency, last week after collection shortfalls shot up to
P25 billion at the end of May from P10 billion at the end of March.
Finance Secretary Margarito Teves
said on Wednesday that Manila would auction off key corporate assets
such as stakes in blue-chips San Miguel Corp. and Manila Electric
Co. to raise an extra P105 billion this year.
“The credibility of the
government’s reform program and the fiscal targets is very much at
stake,” von Amsberg said.
The government aims to balance
its budget by next year and limit the deficit to P63 billion this
year, or 1 percent of GDP.
Von Amsberg said the bank was
encouraged by signs that the government was “concerned and
recognizes the risk of backsliding” in its reform program.
He hoped the setback “will
regenerate that political commitment,” which enabled the Arroyo
administration to push through with a series of crucial and
unpopular tax reform measures in 2004.
Those reforms led to an improved
fiscal base, “allowing the government to spend more for basic
services and infrastructure.”
On Thursday the Bangko Sentral ng
Pilipinas (BSP) reported that the country’s foreign debt improved
slightly at end-March to $54 billion from $55.3 billion in the same
period last year. The decline was mainly due to principal payments
by both the government and the private sector.
The BSP said most of the loans
would mature in the medium to long term for an average maturity of
18.1 years. Public-sector obligations would mature in 20.7 years on
average, or double the private sector’s 9.3 years.
The country’s external
debt-service ratio, or the percentage of the country’s total
principal and interest payments to total exports of goods and
receipts from services and income, stood at 12.1 percent for the
first quarter, or way below the 20-percent international benchmark,
indicating the Philippines has ample foreign reserves to pay for its
obligations.
The external-debt ratio, which is
the percentage of debt to GDP, also improved to 44.2 percent, or by
1.2 and 9.5 percentage points from the quarter- and year-ago levels,
respectively.
In a related development, the
Bureau of Treasury said it will borrow P82 billion from the domestic
market in the third quarter, much higher than the programmed
borrowing in the second quarter.
The borrowings for the third
quarter are seasonally high compared to the initial quarters of the
year, up by around 28 percent compared to the P64 billion in the
second quarter.
The bureau said that it is
sticking to its original borrowing program despite the fiscal
slippage in the first quarter, as the government would focus on the
sale of state assets to meet its deficit target.
--AFP with Maricel E. Burgonio and Angelo S. Samonte
|
