The planned fiscal consolidation, as the government transitions to a new administration, rests on restoring growth in tax collections after a hefty rate cut in corporate income tax and winding down in pandemic-related spending, the Department of Finance (DOF) said yesterday.
In its latest economic bulletin, the DOF said fiscal consolidation and improved revenue collection will be very critical in preserving fiscal stability and returning to rapid, sustainable growth.
To recall, the DOF said work in the remaining months of the Duterte presidency includes finalizing a comprehensive fiscal consolidation and resource mobilization plan for the next administration to ease the transition and keep the momentum of the Philippines’ economic recovery from the pandemic.
“In the light of the Supreme Court ruling on the Mandanas case, the devolution of pertinent functions to local government units will help ease the fiscal burden of the national government,” the DOF said.
“Furthermore, structural measures, such as reforming the pension system of the military and uniformed personnel (MUP), will prevent the further build-up of pressure around fiscal fault lines. According to the 2021 fiscal risk statement, the fiscal impact of the current MUP pension system is about P114 billion annually,” it added.
The DOF also said resuming pre-pandemic economic growth rate calls for learning to live with the virus and fast-tracking the recovery process.
“The infrastructure program remains in full gear, receiving a major boost with a P1.3 billion expenditure allocation in 2022. The recent passage of major economic reforms will also boost economic competitiveness,” it said.
“The passage of the amendments to the Public Service Act and the Foreign Investments Act, together with the recently amended Retail Trade Liberalization Act, will add a potent ingredient to the economic recovery cocktail that can deliver a big shot in the arm of the Philippine economy,” it added.
Meanwhile, data released by the Bureau of the Treasury showed that the national government’s total debt payment has amounted to P313.65 billion as of the first quarter of 2022.
According to the latest cash operations report, the national government’s debt payments in the first three months of the year is 39.86 percent lower than the P521.51 billion paid out in the same period a year ago.
Amortization declined by 58.47 percent to P164.32 billion from the P395.65 billion paid out in the same period a year ago.
Of the total principal payments made during the period, P153.02 billion was used to pay local lenders while P11.31 billion was spent to settle foreign obligations.
Interest payments as of March totaled to P149.33 billion, 18.65 percent higher than the P125.86 billion paid out as of the same period the previous year.
