The Government of the Republic of the Philippines Fiscal Sector Secretary Gary B. Teves Department...

The Government of the Republic of the Philippines

Fiscal SectorFiscal Sector

Secretary Gary B. TevesDepartment of Finance

The Philippines: The Philippines: Making Things HappenMaking Things Happen

Mid-Year Economic BriefingMid-Year Economic Briefing05 September 200605 September 2006

www.iro.phwww.iro.ph


Presentation OutlinePresentation OutlineI. What have we achieved so far?II. What do the numbers tell us?III. What’s next on the policy agenda?


I. What Have We Achieved So I. What Have We Achieved So Far?Far?


Implemented fiscal consolidation Implemented fiscal consolidation program with clear reform targetsprogram with clear reform targets

MeasuresMeasures StatusStatus

Increased power generation tariffsRaised sin taxesBroadened the VAT baseReduced excises on petroleum productsChanged VAT refund proceduresRaised the VAT rate from 10 to 12 percentImplemented the Lateral Attrition LawRationalization of fiscal incentivesSimplified net income tax for self-employedFiscal responsibility bill

OngoingOngoing Ongoing


II. What II. What Do The Numbers Tell Do The Numbers Tell Us?Us?


• Continued reduction Continued reduction in NG deficitin NG deficit

(In Billion Pesos)

NG Deficit

Program Actual

Jan-Dec 2005 % of GDPJan-Jul 2006% of GDP

180.03.4%

122.0*

146.52.7%48.5

(In Billion Pesos)

CPSD

Program Actual

Jan-Dec 2005 % of GDPJan-Mar 2006 % of GDP

180.33.4%77.15.7%

97.62.0%33.22.4%

• CPSD better than CPSD better than programmed programmed

• Debt growth Debt growth slowed downslowed down

(In Billion Pesos)

NG Outstanding Debt

Program Actual

as of end-Dec 2005 % of GDPas of end-Mar 2006 % of GDP

4,247.779.8

3,888.272.3

3,962.571.2

*Jan-Sep 2006


Fiscal performance on track Fiscal performance on track • Jan-Jul 2006 collections higher by 20.0% Jan-Jul 2006 collections higher by 20.0% • Deficit is P34.1 billion lower year-on-yearDeficit is P34.1 billion lower year-on-year

National Government Revenue CollectionsJanuary - July 2006

(In Billion Pesos)

January – July Actual Percent

Growth 2006/2005

Program 2006

2005 2006 Difference

REVENUES 455.2

544.7 89.5 19.7 975.6

BIR 301.9

367.3 65.4 21.7 675.4

BOC 82.9 111.1 28.2 34.1 197.6 BTr Income 43.7 41.5 (2.2) (5.1) 51.8 Others 26.7 24.8 (1.9) (7.1) 50.8EXPENDITURES 537.

8593.2 55.4 10.3 1,100.5

SURPLUS/(DEFICIT)

82.6 48.5 (34.1) (41.3) 124.9

Source: BTr Source: BTr

ReportReport


(In Billion Pesos) 2005Actual

2006FY

Program

Jan-Jul 2006

Actual

Net Financing 236.0 150.0 61.4 External (Net) 92.7 102.4 91.5 External (Gross) 218.3 221.4 128.5 Less: Amortization 125.6 119.1 37.0 Domestic (Net) 143.3 47.6 (30.2) Domestic (Gross) 396.8 310.2 213.0 Less: Amortization 253.5 262.6 243.1 Change in Cash 22.3 1.4 14.0 Budgetary 89.2 25.1 12.8 Non-Budgetary (66.9) (23.7) 1.1 Financing Mix Foreign 39% 42% 38% Domestic 61% 58% 62%

2006 Financing 2006 Financing RequirementsRequirements


III.III. What’s Next On The Policy What’s Next On The Policy Agenda?Agenda?


Policy Objectives Policy Objectives Further improve tax and revenue effortBalance NG budget by end-2008Achieve consolidated public sector surplus by end-2008Cut NG debt by end-2010


• Improve tax and revenue effortsImprove tax and revenue efforts

579

111315171921

Revenue Effort Tax Effort

Revenue Effort 19.4 17.4 16.1 15.3 15.5 14.3 14.6 14.5 14.7 16.1 17.1 17.5

Tax Effort 17.0 15.6 14.5 13.7 13.5 12.5 12.5 12.4 12.7 14.6 15.7 16.1

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006e 2007e 2008e

Policy Objectives Policy Objectives

%


• NG debt cut to 43% of GDP by end-2010NG debt cut to 43% of GDP by end-2010

with EVAT and other admin. revenue enhancement measures


70.3

76.8

81.6

50.8

56.5

63.0

43.048.4

54.8

61.9

68.171.8

40

50

60

70

80

90

2005 2006 2007 2008 2009 2010Original Target Revised Scenario

% of GDP


-146.8-124.9

-63

0 12.1 17

-180-160

-127

-79

-14.40

-200

-150

-100

-50

0

50

2005 2006 2007 2008 2009 2010

Emerging Scenario Original Targets

• Balanced NG budget by end-2008Balanced NG budget by end-2008P Billion




-3.8

-2.8

0.3

-1.8-2.1

-1.5

-0.8

0.1

0.50.6

-1.2

0.4

-4.5-4.0-3.5-3.0-2.5-2.0-1.5-1.0-0.50.00.51.0

2005 2006 2007 2008 2009 2010

Original Targets Emerging Scenario

% of GDP

• CPSD surplus by end-2008CPSD surplus by end-2008




• Institute transparency in the use of taxes Institute transparency in the use of taxes - Starting with E-VAT (A.O. 141)- Starting with E-VAT (A.O. 141)

Periodic report on the use of proceeds

Improve collections

More resources for infra and social services

Continue communicating

benefits

Policy Directions Policy Directions


Policy Directions Policy Directions Sustain improvements in tax collection

Intensify collection efficiency and governance

BIR and BOC Action Plans to enhance collection efficiencyLateral Attrition Act

Strengthen governance measuresRun After Tax Evaders (RATE)Run After The Smugglers (RATS)Revenue Integrity Protection Service


Strengthen GOCC performance oversight Institute performance contracts

Pursue proactive liability managementIncrease share of domestic financingLengthen maturity profileMaximize ODA financing

Develop the domestic capital marketLegislative Measures: PERA Bill, Insurance Code, Pre-Need CodeImprove market infrastructure



6.545.35

1.35

01234567

Revenues Expenditures

(In Trillion Pesos) Capital

Current

(NG SONA Projects = P184.5B)

20%

80%

• Increase infrastructure spending Increase infrastructure spending (2006-2010) (2006-2010)



SONA ProjectsP369.0 B

(NG share: P184.5 B Balance from: GOCCs, LGUs,

GFIs, private sector)

Medium-Term Philippine Investment Plan (MTPIP) Projects

P928 B

• Funding for SONA projects, 2006-Funding for SONA projects, 2006-20102010


Fiscal SectorFiscal Sector

Secretary Gary B.TevesDepartment of Finance

The Philippines: The Philippines: Making Things HappenMaking Things Happen

Mid-Year Economic BriefingMid-Year Economic Briefing05 September 200605 September 2006

www.iro.phwww.iro.ph

The Government of the Republic of the Philippines Fiscal Sector Secretary Gary B. Teves Department...

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