"We are pursuing action plans to help avert any threat to the fiscal sector and the economy as a whole," said Socioeconomic Planning Secretary Romulo L. Neri.
"We aim a balanced budget of the national government by 2009, and this will be achieved through a combination of tax measures, rationalization of expenditures, and reduction of the deficits of the government-owned and-controlled corporations (GOCCs)," said Neri.
At the same time, Neri said the government was keeping its 4.9 to 5.8 percent growth target for the gross domestic product (GDP) for 2004 despite the unfavorable price increases of imported oil.
Neri noted that government was ready to lower its targets especially after the price of barrel of oil from the Organization of Petroleum Exporting Countries (OPEC) reached $40. But now the price of oil dropped to $37 per barrel and the economy is keen on reaching the initial target, said Neri.
He noted the 6.4 percent growth of GDP in the first quarter of 2004, up 1.6 percent from the previous year’s record, as a factor in maintaining growth targets.
The government’s economic managers have identified the ballooning national government and public sector deficit and national government and public sector debt as threats to the economy.
The national government deficit is expected to reach R197.8 billion or 4.2 percent of the gross domestic product (GDP) by end2004, while the consolidated public sector deficit is expected to rise from 5.6 percent of GDP in 2003 to 6.7 percent of GDP by end of this year.
The government debt was 69.2 percent of gross national product (GNP) in 2003 and public sector debt was estimated at 126.2 percent of GNP in the same year.
To address these concerns, Neri, who heads the National Economic and Development Authority (NEDA), said the government will continue to improve tax collection through administrative means like auditing and benchmarking.
He noted though that these measures will not be enough as "we need more resources to improve the quality of education, the health system, and our infrastructure."
Among the tax measures being discussed by the economic managers are indexation of sin taxes, imposition of a tax on text messaging, rationalization of fees and charges, shift to gross income taxation, and rationalization of fiscal incentives.
Neri also disclosed that the national government is looking at tightening its own spending by focusing on its core functions.
"Functions devolved to local government units will no longer be funded by the national government. Strict guidelines on pork barrel utilization will also be laid out so that pork barrel, which is difficult to eliminate, can be used productively," he said.
Economic managers will likewise push for the passage of the Fiscal Responsibility Bill which will ensure that no new expenditure will be approved without new taxes.
Neri stressed the need to restructure and reform the power sector by providing more competitive power rate for the industry to cut the large deficit of the National Power Corporation, the biggest contributor to the large public sector deficit, next to the national government.
Automatic guarantee provisions in certain government corporations will be removed.
He reiterated the need to allow the Social Security System (SSS) to increase the members’ contribution to narrow the funding gap and privatize and diversify funds management to allow for better returns on the funds invested.
