THE Philippines obtained $450 million from the World Bank for a project to improve the country’s fiscal management.
According to the World Bank website, the Fiscal Management Development Policy Loan (DPL) Project for Philippines was approved on March 15, with the Department of Finance designated the implementing agency.
The amount raised will be used to support the “high-level objective” of the government to improve fiscal management with objectives of strengthening tax policy, enhancing public finance management and budget planning as well as strengthening fiscal risk management of public assets.
“This operation responds to a direct request from the government to support the acceleration of fiscal reform efforts in the Philippines,” the World Bank said.
Based on documents posted on World Bank’s website, the specific measures supported by the DPL target improving the equity, efficiency and simplicity of the tax system, which are expected to increase tax revenue collection, specifically from excise taxes on fuel as well as the value-added tax.
The government has a program to reform its tax regime, starting with the Tax Reform for Acceleration and Inclusion Act, which was implemented in 2018. The package updated the income tax brackets, increased take-home pay, and imposed or increased excise tax on certain commodities.
“These reforms will increase the needed fiscal space for higher investment in physical and human capital that would ultimately help achieve more inclusive growth,” the World Bank added.
On the other hand, the public financial management improvements supported by the DPL are expected to bring forward the implementation of the new Budget and Treasury Management System (BTMS), which in turn, would “lead to improvements in efficiency, timeliness and accuracy of budget recording and reporting across government.”
According to the World Bank, at least 10% of total public expenditure is expected to be processed using BTMS by the end of 2019.
“Finally, reforms in support of strengthening the financial risk management of public assets are expected to advance the implementation of a disaster risk financing policy for strengthening resilience to climate and disaster risks, including setting up the necessary institutions and risk insurance instruments,” the bank added. — Karl Angelo N. Vidal