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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 - PowerPoint PPT Presentation
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MEDIUM-TERM MEDIUM-TERM
FISCAL PROGRAMFISCAL PROGRAM
Secretary Emilia T. BoncodinDepartment of Budget and Management
Presentation to GOCCs/GFIsSeptember 15, 2004
Heroes Hall, Malacañang
POLICY OBJECTIVESPOLICY 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
12.0
14.0
16.0
18.0
20.0
22.0
Expenditure Revenue
Expenditure 18.1 17.6 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
Revenue 13 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
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
National Government Fiscal National Government Fiscal PositionPosition1986-20041986-2004(Percent of GDP)(Percent of GDP)
Aquino Ramos Estrada Arroyo
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
Deficit -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
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
National Government DeficitNational Government Deficit1986-20041986-2004(percent of GDP)
Aquino Ramos Estrada Arroyo
-130.0
-120.0
-110.0
-100.0
-90.0
-80.0
-70.0
-60.0
-50.0
-40.0
-30.0
-20.0
-10.0
0.0
10.0
Deficit -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.
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
GOCCs Deficit (14 MNFGCs)GOCCs Deficit (14 MNFGCs)1986-20041986-2004
Aquino Ramos Estrada ArroyoP billion
115.15 113.7
103.01110 110.75
123.16
132.91
121.5130.4
135.6
63.9 60.853.2 55.65 56.14 59.64
65.49 65.6771.1
78.03
0
50
100
150
200
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003*
PUBLIC SECTOR DEBT NG DEBT
PUBLIC SECTOR DEBT TO PUBLIC SECTOR DEBT TO GDP RATIO GDP RATIO
* As of Sept. 2003Source: BTr, NSCB
ACTION PLAN
Deficit Targets, 2004-Deficit Targets, 2004-20102010(Percent of GDP)(Percent of GDP)
0
0.21.2
2.12.9
3.64.2
3.0
3
3.94.6
6.06
6.7
0
1
2
3
4
5
6
7
8
2004 2005 2006 2007 2008 2009 2010
NG Deficit CPSD
Debt Targets, 2003-Debt Targets, 2003-20102010(percent of GDP)
58
90
78
135.6
0
20
40
60
80
100
120
140
160
2003 2004 2005 2006 2007 2008 2009 2010
NG Debt PS Debt
SPECIFIC MEASURES:
1. National Government Revenues Expenditures Debt Management
Measures to Address Fiscal Measures to Address Fiscal ProblemProblem
2. Government-owned and/or Controlled Corporations/Government Financial Institutions
Rate Adjustment Rationalization
Streamlining Compensation Privatization/Outsourcing
Debt Guarantee3. Local Government Units
IRA Adjustment
REVENUE PROGRAM
NG REVENUES, 1986-NG REVENUES, 1986-20042004(percent of GDP)
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
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-TAX REVENUES,1986-2004 2004 Ratio to GDP
-1.02.03.04.05.06.07.08.09.0
10.011.012.013.014.0
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
BIR BOC OTHER OFFICES
NG REVENUES, 2004-2010NG REVENUES, 2004-2010(Percent of GDP)(Percent of GDP)
12.8
14.615.3 15.7
16.78 17.24 17.6414.516.2 16.7 16.9
17.9 18.1 18.5
0.90.91.11.21.4
1.61.7
0
5
10
15
20
2004 2005 2006 2007 2008 2009 2010
Tax Non Tax Total Revenues
TAX REVENUES, 2004-2010TAX REVENUES, 2004-2010(Percent of GDP)
14.013.713.412.612.311.7
10.3
3.53.43.33.02.92.82.4
0.10.10.10.10.20.20.20.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2004 2005 2006 2007 2008 2009 2010
BIR BOC Other Offices
A. Improving Administrative Efficiency 1. Periodic adjustment of fees and charges2. 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
ports3. Rate Adjustment
ACTION PLAN: ACTION PLAN: RevenuesRevenues
B. Privatization
ACTION PLAN: RevenuesACTION 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: RevenuesACTION PLAN: Revenues
5. General Tax Amnesty with Submission of SAL
6. Lateral Attrition System7. Franchise Tax on
Telecommunications to replace VAT
8. Two-Step Increase in the VAT rate
Php B
na
na
19.9
5.0
EXPENDITURES
NG Expenditures to GDP, NG Expenditures to GDP, PhilippinesPhilippines
0.0
5.0
10.0
15.0
20.0
25.0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Expenditure Capital Outlays
Source: DBM
BUDGET FLEXIBILITY BUDGET FLEXIBILITY MARGINSMARGINS
PS
27%
INTEREST
28%
IRA
7%
INFRA
9%
OTHERS
29%
PS
37%
INTEREST
16%
IRA
14%
INFRA
10%
OTHERS
23%
PS
33%
INTEREST
32%
IRA
16%
INFRA
6%
OTHERS
13%
1992
2004
1997
Personal Services, Selected Personal Services, Selected Asian CountriesAsian Countries(Percent of GDP)
6.6
1.8
5.2
5.9
5.3
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Philippines2001
Indonesia 1997 Malaysia 1997 Thailand 2001 Singapore2001
Personal Services, Selected Personal Services, Selected Asian CountriesAsian Countries (Percent of Tax Collections)
0
10
20
30
40
50
60
Philippines Thailand Singapore
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
1995 1996 1997 1998 1999 2000 2001
Capital Outlays, Selected Capital Outlays, Selected AsianAsian CountriesCountries (Percent of GDP)
0
2
4
6
8
10
12
Philippines Malaysia Thailand Singapore Vietnam
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
1995 2001
Expenditure Targets, 2004-Expenditure Targets, 2004-20102010 (Percent of GDP)
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Interest Payments
Personal Services
Capital Outlays
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
2004 2005 2006 2007 2008 2009 2010
ACTION PLAN: ACTION PLAN: ExpendituresExpenditures
Administrative Measures
A. Issuance of Economy Measures Administrative Order to be issued
by PGMA directing cost-reduction program on utilities, supplies, travel, etc.
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...Administrative: Expenditures
ACTION PLAN: ACTION PLAN: ExpendituresExpenditures
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
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
Action Plan...Legislative: Expenditures
DEBT MANAGEMENT
1. Bond exchange to lengthen debt maturity
2. Make more use of ODAs than commercial borrowings
3. Debt cap4. Limit borrowings to high
priorityimport projects
ACTION PLAN:Debt ACTION PLAN:Debt ManagementManagement
