MALACANANG, January 18, 2006
 (OFFICE OF THE PRESS SECRETARY) The government’s fiscal reforms have strengthened the credibility of the Philippines in the international community, the Department of Finance (DOF) said in a recent report to Malacanang.

"Our efforts to improve revenue collection and implement sustained meaningful reforms have strengthened our credibility in the international community," DOF said in its report.

The country’s improved credibility, it added," is evidenced by the positive findings of the International Monetary Fund (IMF) post-program monitoring mission."

DOF said the government’s fiscal consolidation program is on track with the implementation of the Reformed Value Added Tax (RVAT) which gave a positive impact on the country’s economy.

In his report to President Gloria Macapagal-Arroyo, Finance Secretary Margarito Teves said the National Government’s revenue collections as well as its deficit and consolidated public sector deficit performed better than programmed for the period January to October 2005.

He said the implementation of the RVAT contributed in part to the strengthening of the peso, which is now considered the "darling currency in Asia" and one of the best performing in the whole world.

The report further said revenue collections from January to October 2005 amounted to P661.2 billion or P13.5 billion higher than the programmed figure despite the Bureaus of Internal Revenue (BIR) and Customs (BOC) lower than target collections.

The BIR total collections reached P440.4 billion, which is P8.8 billion lower than target while the BOC collected P116.7 billion, with a shortfall of P8.9 billion.

The BIR and BOC shortfalls, however, were compensated by the Bureau of Treasury’s (BTr) increased collection which exceeded its 10-month target by P29 billion, while expenditures amounted to P776.7 billion of which 34.4 percent represented interest payments.

The national government posted a deficit of P115.5 billion for the period or P40.5 billion lower than the programmed P156 billion.

The consolidated public sector deficit (CPSD), the report said, amounted to P74.6 billion or 1.9 percent of the Gross Domestic Product (GDP), better than the programmed deficit of 4.2 percent of the GDP for the period.

The lower-than-target CPSD was primarily due to the lower than programmed deficits of the national government and 14 monitored government-owned and controlled corporations (GOCCs) as well as the improved financial performance of other public sector entities, particularly the social security institutions.

The report further said that the DOF is resolved to implement the two percent VAT increase by February 1 if warranted.

This would further renew the confidence of the international financial community on the country as the IMF has "commended the government’s significant progress with economic reforms and its clear commitment to raising the VAT rate on February 1 next year," the report said.

Chief News Editor: Sol Jose Vanzi

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