MANILA, JULY 3, 2007
(STAR) By Des Ferriols - Finance Secretary Margarito Teves told Bureau of Internal Revenue (BIR) employees yesterday a “very serious” situation exists at the government’s revenue collection agency.

Speaking at the induction of BIR officer-in-charge Lilian Hefti, Teves said the agency would have to collect P730 billion from operations this year to finance and deliver programmed infrastructure and social services, as well as sustain business confidence.

“Unlike in 2006 when we had the expanded value added tax, we do not have new taxes this year,” he said. “Revenue collection, therefore, would have to be driven by serious tax administration efforts and better collection efficiency.”

Teves said he believes that Hefti could “whip the BIR into shape,” although the government overshot its six-month deficit target by P10 billion in the first five months alone.

“As I have said in the previous occasion, we have a very serious situation,” he said. “I know that everybody is aware of the challenge ahead.”

The BIR has six months to catch up on the shortfalls of the last six months, where revenues consistently fell short of the target set for the period.

Hefti is replacing former commissioner Jose Mario Buñag, who was removed after the BIR consistently failed to meet its collection targets.

Hefti is a career official who headed the BIR’s operations department.

Buñag’s fall from grace resulted from increasing concerns that the government would end up missing its fiscal targets this year because of two consecutive years of failure to meet revenue collection marks.

T-bill sale resumes with all tenors up By Des Ferriols Tuesday, July 3, 2007

After a month-long hiatus, the government resumed its Treasury bill (T-bill) auction yesterday with interest rates rising across the board.

The rate for the benchmark 91-day T-bill rose by a notable 48.1 basis points from 2.996 percent to settle at 3.477 percent while that of the 182-day T-bill inched up from 4.274 percent to 4.639 percent.

The yield on the one-year notes went up slightly from 5.174 percent to 5.438 percent, still indicating a certain level of uncertainty over the country’s fiscal prospect over a 12-month horizon.

Yesterday’s auction was the first since the Bureau of the Treasury (BTr) suspended the sale of T-bills in June.

Finance Undersecretary and BTr officer in charge Roberto Tan said that yesterday’s offers were three times oversubscribed on the average across all tenors despite the success of the Bangko Sentral ng Pilipinas (BSP) in its mopping up operations.

Tan said the market was awash with liquidity as P37 billion worth of retail treasury bonds (RTBs) matured last week.

Yesterday’s auction results marked the first time in months that the benchmark rates are allowed to increase by this much but Tan said the auction committee is ready to reject bids if they would move too high in the following weeks. “If we have to reject, we will,” he said.

Bid applications for the benchmark notes amounted to only P3.1 billion against the total offer of P1 billion. The six-month notes attracted total tenders amounting to P6.975 billion against the total offer of P1.5 billion.

For the one year notes, the auction committee reported total tenders amounting to P7.145 billion against the offer size of P2.5 billion.

As the BSP declared initial success in its mopping up of excess domestic liquidity, the effect on the T-bill market remains to be seen after initial speculation that it would drain funds out of short-term T-bills.

To arrest the rapid increase in domestic liquidity, the BSP intended to lure government deposits away from banks by offering better interest rates and the Monetary Board also allowed the trust departments of banks to park their funds in the BSP’s special deposit accounts or SDAs.

Although finance and even BSP officials contended that the impact would be minimal, documents showed that at the outset, the BSP’s SDAs would compete with the 91 and 182-day T-bills with the SDA rates much higher than T-bill rates.

Chief News Editor: Sol Jose Vanzi

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