Govt to embark on new strategy vs fiscal woes

The government under the administration of President Benigno Aquino III is embarking on a new tack to address the country’s fiscal woes by focusing on the tax effort ratio than striving for a balanced budget. Increasing the efficiency of collection would be the immediate goal so that the tax effort, or revenue collection in relation to the gross domestic product, could improve dramatically over time, Finance Secretary Cesar Purisima said Thursday. “We will work to achieve a tax effort of 15 percent of GDP after about a year," Kim Henares, commissioner of the Bureau of Internal Revenue, told reporters on Wednesday. At 12.3 percent of GDP, the Philippine tax effort is inferior by regional standards and keeps government from pursuing social and developmental programs that sustain long-term economic growth. Purisima ruled out the urgency of balancing the budget that fiscal and monetary authorities saw widening to P300 billion from P293 billion last year. “Balancing the budget is really not an important goal, as far as I am concerned. But keeping it within manageable level, which I believe is 2 percent of GDP, is something we’d like to do, because we would like to create space within the budget to support the goals of President Benigno “Noynoy" Aquino III," Purisima said. Fiscal and monetary officials expected the deficit this year at 3.6 percent of the GDP. “Keeping it within manageable level is what the markets expect from us," Purisima noted. An inventory of government assets for privatization is now taking place, according to Purisima in the notes from Wednesday’s press briefing in Malacañang after the administration’s first Cabinet meeting. Proceeds from the privatized assets would be earmarked for investment programs instead of using the money to bridge the budget gap, Purisima said. “My view is that we use asset sales to fund investments. It is not healthy to use asset sales to cover budget deficits, because that is not sustainable. We would like to put the proceeds in social investments, in education, in health care, and agriculture to help us create jobs. We are clearly lagging in these areas," he said. The government expects to realize some P30 billion from the sale of the 102-hectare Food Terminal Inc. complex in Taguig City, as well as the remaining stake in Philippine National Oil Co. – Exploration Corp. and the properties in Tokyo’s Fujimi district. —VS, GMANews.TV