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8/12/2019 3- PPT on Fiscal and Monetary
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Reported by:
LOVE JOY PALLAYA-BALETA
Fiscal and Monetary
Policyand Issues
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INTRODUCTION
One major function of the government is to
stabilize the economy (prevent
unemployment or inflation)
Stabilization can be achieved in part by
manipulating the public budget-
government spending and tax collections-
to increase output and employment or toreduce inflation.
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FISCAL POLICY
refers to the measures employed by
governments to stabilize the economy,
specifically by manipulating the levels and
allocations of taxes and governmentexpenditures
is the use of government expenditure and
revenue collection to influence theeconomy.
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is used by the governments to influence
the level of aggregate demand in theeconomy, in an effort to achieve economic
objectives of price stability, full
employment and economic growth.
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Objectives of Fiscal Policy
Removal of unemployment -increases
govt. expenditure and reduces taxes.
Maintenance of economic development-
increase the rate of capital formation
Maintenance of price stability- reduce
aggregate demand by reducing exp.and
increasing direct and indirect taxes.
Reduction in economic inequality- more
taxes on rich
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History Fiscal Policy
(from different administration)Marcos Admin.
- primarily focused on indirect tax collectionand on government spending on economic
services and infrastructure development.
Aquino Admin.
- a large fiscal deficit from the previous
administration, but managed to reduce fiscalimbalance and improve tax collection through
the introduction of the 1986 Tax Reform
Program and the value added tax.
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Estrada Admin
- faced a large fiscal deficit due to thedecrease in tax effort and the repayment of theRamos administrations debt to contractors and
suppliers.
Arroyo Admin.
- the Expanded Value Added Tax Law wasenacted, national debt-to-GDP ratio peaked, and
underspending on public infrastructure and othercapital expenditures was observed.
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Monetary Policy
is the process by which the monetary
authority of a country controls the supply
of money, often targeting a rate of interest
to attain a set of objectives orientedtowards the growth and stability of the
economy.
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is one of the tools that a national
government uses to influence its economy.Using its monetary authority to control the
supply and availability of money, a
government attempts to influence the
overall level of economic activity
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is a tool used by the central bank to
manage money supply in the economy inorder to achieve a desirable growth . The
central bank controls the money supply by
increasing and decreasing the cost ofmoney, the rate of interest.
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Objectives of Monetary Policy
Economic growth -increase capital
formation
Exchange stability -stability of balance of
payment
Full employement -increase production
Price stability - to eradicate inflation anddeflation.
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Credit control -increase and decrease
interest ratesReduction in economic inequalities -
distribution of income and wealth.
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The Bangko Sentral ng
Pilipinas or BSP the central monetary authority of the
republic of the Philippines. It provides
policy directions in the areas of money,
banking and credit and exists to superviseoperations of banks and exercises
regulatory powers over non-bank financial
institution.
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It keeps aggregate demand from growing
rapidly with resulting high inflation, or from
growing too slowly, resulting inhigh unemployment.
primary objective of BSP's monetary policyis to promote price stability because it has
the sole ability to influence the amount of
money circulating in the economy.
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Main Source Of Revenue in the
Philippines
Taxes
Non-tax revenue
Domestic SourcesExternal Sources
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THANK YOU!!!