WB, ADB CAUTION POLL SPENDING IN 2007 MAY NEGATE RP'S FISCAL GAINS
MANILA, DECEMBER 12, 2006 (STAR) By Ma. Elisa P. Osorio - Two of the country’s biggest institutional lenders have advised the government to make sure that economic gains achieved through increased taxation will not be negated by the May 2007 national elections.
In separate statements, the Asian Development Bank (ADB) and the World Bank said the fiscal gains, which contributed to an improved economy, should not be sacrificed just because of the electoral process early next year.
"The authorities need to ensure that these gains in fiscal consolidation are maintained, as the 2007 elections may strain the government budget," the ADB warned.
For its part, the World Bank, through its lead economist to the Philippines Sanjay Dahr said: "I think it is important to demonstrate that even in the election period, the government’s fiscal targets are respected and the efforts in improving tax administration will continue."
Instead of relaxing tax measures, Dahr suggested highlighting the benefits of tax collection to the broader public through improvement of social services and infrastructure.
For the year, the World Bank has noted a sharp increase in tax revenue collection and, according to the agency, this has strengthened the credibility of the government’s fiscal consolidation objectives.
Value-added Tax revenue alone was six percent above target for the first eight months of the year. Total tax revenue, including non cash collection, grew by 24 percent.
In order to maintain its tax collection program, the Bureau of Internal Revenue has set up a Tax Reform Administration Group. The task force will maintain the reform program including performance-based management.
The World Bank said the overall economic performance of the country strengthened this year as a result of the recovery of agriculture, exports and continued growth of OFW remittances.
Average inflation for the first three quarters, which measures the rise in prices, was also better at 6.8 percent from 7.9 percent a year earlier. The World Bank credits this to the stabilization of farm prices and the stronger peso.
Chief News Editor: Sol Jose Vanzi
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