RP gets quizzed about exit strategy, deficit
A visiting International Monetary Fund (IMF) team has asked the government about its "exit strategy" and plans to cut the budget deficit, to which officials said they replied by giving assurances that stimulus spending would be cut once the economy picks up.
The matter, Finance Undersecretary Gil S. Beltran told BusinessWorld on Tuesday, was raised in a meeting last week that was part of an annual Article IV consultation the Washington-based lender conducts with its member economies.
"They (IMF team) just wanted to know our exit strategy, how to consolidate public sector finances when recovery starts ... They asked us how are we going to reduce the deficit," Mr. Beltran said.
"We told them we will balance the budget in 2013. We have a plan to cut the deficit. We now have stimulus packages but when growth starts to pick up, we will cut down on spending relative to this year’s level."
The Finance department official said a recovery would be deemed to have taken place once robust growth is sustained and the danger of an output decline was not imminent.
Mr. Beltran, who heads the department’s domestic finance group, said officials also assured the IMF team that efforts to raise revenues were being undertaken.
"We told them we cannot promise you the cooperation of Congress, but we are already recommending the passage of revenue bills. Our administrative measures are ongoing such as expanding the BIR (Bureau of Internal Revenue) database and audit programs," he said.
The IMF has been meeting with government officials since November 16.
The mission ends on Wednesday with the release of an assessment of government policies and recommendations.
Reports have said the team had expressed particular concern about the country’s swelling budget deficit, which hit P266.1 billion in October. Mr. Beltran, however, claimed that this was not the case.
"No, not in the meeting I attended," he said when asked to confirm the reports. "But we will not allow the deficit to swell. We will not allow the situation to worsen."
Members of the IMF mission were not immediately available for comment.
The government has sought to increase spending to support the economy, which is expected to grow by just 0.8-1.8 percent this year from 4.6 percent last year due to the global downturn.
As of October, total disbursements hit P1.19 trillion, 15.1 percent higher than the P1.03 trillion spent a year ago.
The Bangko Sentral ng Pilipinas, meanwhile cut interest rates to a record low, among other measures, in a bid to inject liquidity into the system.
It has since ended the easing cycle but has held off from raising interest rates.
Last week, central bank governor Amando M. Tetangco, Jr. said there was no rush to implement an exit strategy.
Earlier in the week a deputy said a review of accommodative policies was being conducted.
The government’s decision to bankroll stimulus programs forced it to hike this year’s deficit cap to P250 billion, a significant increase from the original P40-billion target set last year.
A 2010 balanced budget goal was deferred to 2013.
Weaker revenues blamed on legislated tax cuts and the slower economy widened the shortfall to P266.1 billion as of end-October, past the full-year cap of P250 billion.
Officials have admitted that the budget gap may reach as high as P300 billion if the government continues to fall short of its revenue goals and fails to sell assets lined up for privatization.
Last month the IMF said it expects the Philippines to grow by 1 percent this year, taking back a June forecast of a 1 percent contraction.
The forecast, which is well within the government’s 0.8-1.8 percent target, was made following an improved second quarter.
Official third quarter growth figures are scheduled to be released on Thursday. - BusinessWorld
The matter, Finance Undersecretary Gil S. Beltran told BusinessWorld on Tuesday, was raised in a meeting last week that was part of an annual Article IV consultation the Washington-based lender conducts with its member economies.
"They (IMF team) just wanted to know our exit strategy, how to consolidate public sector finances when recovery starts ... They asked us how are we going to reduce the deficit," Mr. Beltran said.
"We told them we will balance the budget in 2013. We have a plan to cut the deficit. We now have stimulus packages but when growth starts to pick up, we will cut down on spending relative to this year’s level."
The Finance department official said a recovery would be deemed to have taken place once robust growth is sustained and the danger of an output decline was not imminent.
Mr. Beltran, who heads the department’s domestic finance group, said officials also assured the IMF team that efforts to raise revenues were being undertaken.
"We told them we cannot promise you the cooperation of Congress, but we are already recommending the passage of revenue bills. Our administrative measures are ongoing such as expanding the BIR (Bureau of Internal Revenue) database and audit programs," he said.
The IMF has been meeting with government officials since November 16.
The mission ends on Wednesday with the release of an assessment of government policies and recommendations.
Reports have said the team had expressed particular concern about the country’s swelling budget deficit, which hit P266.1 billion in October. Mr. Beltran, however, claimed that this was not the case.
"No, not in the meeting I attended," he said when asked to confirm the reports. "But we will not allow the deficit to swell. We will not allow the situation to worsen."
Members of the IMF mission were not immediately available for comment.
The government has sought to increase spending to support the economy, which is expected to grow by just 0.8-1.8 percent this year from 4.6 percent last year due to the global downturn.
As of October, total disbursements hit P1.19 trillion, 15.1 percent higher than the P1.03 trillion spent a year ago.
The Bangko Sentral ng Pilipinas, meanwhile cut interest rates to a record low, among other measures, in a bid to inject liquidity into the system.
It has since ended the easing cycle but has held off from raising interest rates.
Last week, central bank governor Amando M. Tetangco, Jr. said there was no rush to implement an exit strategy.
Earlier in the week a deputy said a review of accommodative policies was being conducted.
The government’s decision to bankroll stimulus programs forced it to hike this year’s deficit cap to P250 billion, a significant increase from the original P40-billion target set last year.
A 2010 balanced budget goal was deferred to 2013.
Weaker revenues blamed on legislated tax cuts and the slower economy widened the shortfall to P266.1 billion as of end-October, past the full-year cap of P250 billion.
Officials have admitted that the budget gap may reach as high as P300 billion if the government continues to fall short of its revenue goals and fails to sell assets lined up for privatization.
Last month the IMF said it expects the Philippines to grow by 1 percent this year, taking back a June forecast of a 1 percent contraction.
The forecast, which is well within the government’s 0.8-1.8 percent target, was made following an improved second quarter.
Official third quarter growth figures are scheduled to be released on Thursday. - BusinessWorld
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