Transcript Document

MEDIUM-TERM
FISCAL PROGRAM
Secretary Emilia T. Boncodin
Department of Budget and Management
Presentation to GOCCs/GFIs
September 15, 2004
Heroes Hall, Malacañang
POLICY OBJECTIVES
 Balance the national government
budget in 6 years
 Reduce CPSD to GDP ratio to 3% in 6
years
 Reduce Public Sector Debt to GDP
ratio to 90% in 6 years
National Government Fiscal Position
1986-2004
(Percent of GDP)
Aquino
22.0
Ramos
Expenditure
Estrada
Arroyo
Revenue
20.0
18.0
16.0
14.0
12.0
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Expenditure
Revenue
18.1 17.6
13
17
18.6 20.2 19.8 19.1 19.1 18.9 18.4 18.6 19.4 19.2 19.8 19.3 19.6 19.6 19.2 18.4
15.1 14.1 16.5 16.8 17.7
18
17.7 19.9 18.9 18.9 19.4 17.4 16.1 15.3 15.3 14.1 14.6 14.8
National Government Deficit
1986-2004
(percent of GDP)
Aquino
Ramos
Estrada
Arroyo
2.0
1.0
0.0
-1.0
-2.0
-3.0
-4.0
-5.0
-6.0
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Def icit
-5.1
-2.4
-2.9
-2.1
-3.5
-2.1
-1.2
-1.5
1.0
0.6
0.3
0.1
-1.9
-3.8
-4.0
-4.0
-5.3
-4.6
-4.2
GOCCs Deficit (14 MNFGCs)
1986-2004
P billion
Aquino
Ramos
Estrada
Arroyo
10.0
0.0
-10.0
-20.0
-30.0
-40.0
-50.0
-60.0
-70.0
-80.0
-90.0
-100.0
-110.0
-120.0
-130.0
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Def icit
-6.8
0.3
2.9
-3.0 -19.1 -7.4 -10.7 -25.6 -9.7
-1.3 -11.2 -17.2 -38.0 -4.6 -19.2 -24.5 -46.4 -65.3 -125.
PUBLIC SECTOR DEBT TO GDP
RATIO
200
150
132.91
115.15
123.16
113.7
103.01
110
130.4
121.5
110.75
100
63.9
60.8
135.6
53.2
55.65
56.14
59.64
1996
1997
1998
1999
65.49
65.67
2000
2001
71.1
78.03
50
0
1994
1995
PUBLIC SECTOR DEBT
Source: BTr, NSCB
2002
2003*
NG DEBT
* As of Sept. 2003
ACTION PLAN
Deficit Targets, 2004-2010
(Percent of GDP)
8
7
6.7
6
6
6.0
4.6
5
4
3
3.9
3
4.2
3.6
2.9
2
3.0
2.1
1
0
1.2
0
2004
2005
2006
2007
2008
NG Deficit
CPSD
0.2
2009
2010
Debt Targets, 2003-2010
(percent of GDP)
160
140
135.6
120
100
90
80
60
78
58
40
20
0
2003
2004
2005
2006
NG Debt
2007
2008
PS Debt
2009
2010
SPECIFIC MEASURES:
Measures to Address Fiscal Problem
1. National Government
 Revenues
 Expenditures
 Debt Management
2. Government-owned and/or Controlled
Corporations/Government Financial Institutions
 Rate Adjustment
 Rationalization
 Streamlining
 Compensation
 Privatization/Outsourcing
 Debt Guarantee
3. Local Government Units
 IRA Adjustment
REVENUE PROGRAM
NG REVENUES, 1986-2004
(percent of GDP)
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19
TAX
NON-TAX
TAX REVENUES,1986-2004
Ratio to GDP
BIR
BOC
OTHER OFFICES
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
14.0
13.0
12.0
11.0
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
-
NG REVENUES, 2004-2010
(Percent of GDP)
20
16.2
16.7
16.9
14.5
15
14.6
10
5
15.3
15.7
17.9
18.1
18.5
16.78
17.24
17.64
12.8
1.7
0
2004
1.4
1.6
2005
2006
Tax
1.2
2007
Non Tax
1.1
2008
Total Revenues
0.9
2009
0.9
2010
TAX REVENUES, 2004-2010
(Percent of GDP)
16.0
11.7
12.3
12.6
2.4
2.8
2.9
3.0
0.2
0.2
14.0
12.0
13.7
14.0
3.3
3.4
3.5
0.1
0.1
0.1
13.4
10.3
10.0
8.0
6.0
4.0
2.0
0.0
2004
2005
0.2
2006
BIR
0.1
2007
BOC
2008
Other Offices
2009
2010
ACTION PLAN: Revenues
A.
Improving Administrative Efficiency
1.
2.
3.
B.
Periodic adjustment of fees and charges
Improve enforcement mechanisms to increase collection
efficiency:
BIR: Computerization/Automation of operating system;
Enhancement of Audit Program;
Intensified enforcement procedures;
Conduct taxpayer compliance verification drive.
BOC: Modernization of information systems and technology;
Create Task Force Anti-Smuggling;
Strengthening of Internal Audit Service;
Purchase of Container X-rays for ports
Rate Adjustment
Privatization
ACTION PLAN: Revenues
B. Proposed Legislative Measures
1. Gross income tax system for
corporation and self employed
2. Indexation of the excise tax on
sin products
3. Increase excise tax on
petroleum products
4. Rationalize fiscal incentives
Php B
16.8
7.0
29.7
5.0
ACTION PLAN: Revenues
Php B
5.
6.
7.
8.
General Tax Amnesty with Submission
of SAL
Lateral Attrition System
Franchise Tax on Telecommunications
to replace VAT
Two-Step Increase in the VAT rate
na
na
5.0
19.9
EXPENDITURES
NG Expenditures to GDP, Philippines
25.0
20.0
15.0
10.0
5.0
0.0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Expenditure
Capital Outlays
Source: DBM
BUDGET FLEXIBILITY MARGINS
OTHERS
13%
PS
INFRA
33%
6%
OTHERS
IRA
23%
PS
16%
37%
PS
OTHERS
27%
29%
INFRA
INTEREST
10%
32%
IRA
14%
INTEREST
16%
1997
INFRA
9%
IRA
INTEREST
7%
28%
1992
2004
Personal Services, Selected Asian
Countries
(Percent of GDP)
7.0
6.6
5.9
6.0
5.2
5.3
5.0
4.0
3.0
1.8
2.0
1.0
0.0
Philippines
2001
Indonesia 1997 Malaysia 1997 Thailand 2001
Singapore
2001
Personal Services, Selected Asian
Countries
(Percent of Tax Collections)
60
50
40
30
20
10
0
1995
1996
1997
1998
1999
2000
2001
Philippines
35.3
36.8
41.9
47.6
47.0
49.0
48.8
Thailand
31.5
30.5
33.7
42.2
45.2
42.6
40.9
Singapore
29.2
29.5
30.5
34.3
32.9
31.0
34.1
Philippines
Thailand
Singapore
Capital Outlays, Selected Asian
Countries
(Percent of GDP)
12
10
8
6
4
2
0
1995
2001
Philippines
3.7
2.9
Malaysia
4.7
10.2
Thailand
5.4
4.4
Singapore
3.7
5.8
Vietnam
5.3
8.1
Philippines
Malaysia
Thailand
Singapore
Vietnam
Expenditure Targets, 2004-2010
(Percent of GDP)
7.0
6.0
5.0
4.0
3.0
2.0
Interest Payments
Personal Services
1.0
Capital Outlays
0.0
2004
2005
2006
2007
2008
2009
2010
Interest Payments
5.8
5.9
5.6
5.1
4.7
4.2
3.7
Personal Services
6.2
5.7
5.5
5.3
5.1
5.0
4.8
Capital Outlays
2.0
2.5
2.7
3.0
3.4
3.9
4.0
ACTION PLAN: Expenditures
Administrative Measures
A. Issuance of Economy Measures
 Administrative Order to be issued by
PGMA
directing
cost-reduction
program on utilities, supplies, travel,
etc.
Action Plan…Administrative: Expenditures
B. Rationalization of Personal Services
1. Objectives



Deactivation of functions no longer
relevant
Consolidation/rationalization of
duplicating functions
Strengthening of important functions
2. Mechanics

Voluntary but time-bound separation
opportunity but with option to (1) remain
in government service; or (2) be
separated with incentives
Action Plan…Administrative: Expenditures
C. Improvement of Management and Control of
GOCCs
 EO to improve governance of GOCCs/Other
Government Corporate Entities (OGCEs)


Improve operational responsibility of supervising
departments/agencies over GOCCs/OGCEs attached to
them
Impose moratorium on establishment of subsidiary
GOCCs pending assessment of operations of all
subsidiary GOCCs
 Privatization/Outsourcing
Action Plan...Administrative: Expenditures
D. Fully implement devolution provision of
the LGU Code

MFC to be primary conduit for funds
(except IRA and mandated shares to
LGUs)
E. Increase social safety net program within
the budget
F. Transfer to the General Fund of all
balances of dormant accounts
ACTION PLAN: Expenditures
Legislative Measures
A. Enactment of Fiscal Responsibility
Bill
 Reduce public debt to more
manageable levels by imposing
debt cap
 No new expenditure without new
revenue measure
Action Plan...Legislative: Expenditures
B. Rationalize government retirement
and pension schemes



Suspend RA 1616: All retirement paid
by GSIS
Select veterans’ benefits that can be
reasonably funded
Make pension benefits commensurate
to premium contributions
Action Plan...Legislative: Expenditures
C. Rationalize government compensation
system



Simplify position classification
Simplify compensation structure and
implement performance-based
compensation system
Rationalize compensation of board
members and corporate officers
D. Remove automatic guarantee
provisions in certain GOCCs
DEBT MANAGEMENT
ACTION PLAN:Debt Management
1. Bond exchange to lengthen debt
maturity
2. Make more use of ODAs than
commercial borrowings
3. Debt cap
4. Limit borrowings to high priority
import projects