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Upmanila lecture11dof

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Econ 151, ppt, Sir Mesina, CAS-UPM

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Upmanila lecture11dof

  1. 1. Development of Philippine Fiscal Policy
  2. 2. OUTLINE OF PRESENTATION <ul><li>Definition of Concepts </li></ul><ul><li>DOF Mandate </li></ul><ul><li>Fiscal Accounts </li></ul><ul><li>Reform and Advocacy Agenda </li></ul><ul><li>The Budget Cycle </li></ul><ul><li>Role of the Private Sector </li></ul>
  3. 3. Definition of Concepts
  4. 4. Definition of Public Policy: - generally the principled guide to action taken by the administrative or executive branches of the state with regard to issues in a manner consistent with law and institutional customs.
  5. 5. Public Policy (Continued): - a system of courses of action, regulatory measures, laws and funding priorities promulgated by a governmental entity or its representatives.
  6. 6. Fiscal Policy : - a government policy with regard to its resource generation and spending activities.
  7. 7. Fiscal Consolidation: - a determined effort to bring down the budget deficit.
  8. 8. <ul><li>Two Components of Fiscal Policy: </li></ul><ul><ul><li>Revenue component – Obtaining funds for government operation by collecting taxes, fees and charges and/or borrowing </li></ul></ul><ul><ul><li>2. Expenditure component – Spending of funds to provide goods and services </li></ul></ul>
  9. 9. DOF Mandate
  10. 10. <ul><li>Formulation, institutionalization and administration </li></ul><ul><li>of fiscal policies; </li></ul><ul><li>Generation and management of the financial resources </li></ul><ul><li>of government; </li></ul><ul><li>Supervision of the revenue operations of all local </li></ul><ul><li>government units; </li></ul><ul><li>Review, approval and management of all public sector </li></ul><ul><li>debt, domestic or foreign; </li></ul><ul><li>Rationalization, privatization and public accountability of </li></ul><ul><li>corporations and assets owned, controlled or acquired by </li></ul><ul><li>the government. </li></ul>Under Executive Orders 127, 127A and 292
  11. 11. Two Major Fiscal Agencies: The Department of Finance (DOF) is responsible for the preparation of the annual and medium-term revenue program of the government . The Department of Budget and Management (DBM) manages the expenditures side.
  12. 12. The Fiscal Accounts
  13. 13. Basic Elements of Fiscal Accounts <ul><li>Revenues </li></ul><ul><li>Expenditures </li></ul><ul><li>Financing </li></ul>
  14. 14. EXPENDITURES: ( interest payments, personnel services, infra, allotment to LGUs) FINANCING: External (official development assistance, commercial loans) Domestic (T- Bills, T-Notes, T-Bonds, Bank Loans) Components of Revenues, Expenditures and Financing (Philippine Fiscal Accounts) <ul><li>REVENUES: </li></ul><ul><ul><li>Tax Revenues : BIR, BOC, Other Offices (e.g. Environmental Tax, </li></ul></ul><ul><ul><li>Immigration Tax, Travel Tax) </li></ul></ul><ul><ul><li>Non-Tax Revenues : ( privatization, fees and charges, dividend from </li></ul></ul><ul><ul><li>GOCCs, grants for projects/programs ) </li></ul></ul>
  15. 15. Modes of Financing <ul><li>Domestic Borrowing </li></ul><ul><ul><li>Central Bank (monetization) </li></ul></ul><ul><ul><li>Bank Financing ( mostly gov’t corporate sector borrowings) </li></ul></ul><ul><ul><li>Non-bank Financing (e.g. gov’t. securities: T-Bills; T-Notes & T-Bonds) </li></ul></ul><ul><li>Foreign Borrowing </li></ul><ul><ul><li>Official (Bilateral); Multilateral (IMF, World Bank) and Commercial Loans </li></ul></ul>
  16. 16. FISCAL DEFICIT Creates Macroeconomic Impact - Depends on how it is financed <ul><li>Inflation </li></ul><ul><li>Interest Rates </li></ul><ul><li>“ Crowding Out” Effect </li></ul><ul><li>External Position </li></ul><ul><ul><li>reduced reserves, increased debt, potential BOP problem </li></ul></ul>
  17. 17. 2012 NG Fiscal Program 17 In Billion Pesos 2010 2011 2012 Growth Rate Actual Program Program (2012/2011) Total Revenues % of GDP 1,207.9 13.4% 1,411.3 14.2% 1,568.5 14.2% 11.1% Tax Revenues % of GDP 1,093.6 12.1% 1,273.2 12.8% 1,445.5 13.1% 13.5% BIR BOC Other Offices 822.6 259.2 11.8 940.0 320.0 13.2 1,066.1 365.1 14.2 13.4% 14.1% 7.6% Non-Tax Revenues % of GDP 114.3 1.3% 138.1 1.4% 123.0 1.1% -10.9% BTr Income Fees and Charges Privatization Grants 54.3 58.6 0.9 0.4 70.0 62.1 6.0 0.0 51.8 69.3 2.0 0.0 -26.0% 11.6% -66.7% Expenditure 1,522.4 1,711.3 1,854.5 8.4% Surplus / (Deficit) % of GDP (314.4) -3.5% (300.0) -3.0% (286.0) -2.6% -4.7%
  18. 18. Consolidated Public Sector Financial Position In Billion Pesos 2010 Actual 2011 Program 2012 Program Growth Rate (2012/2011) Total Surplus/(Deficit) % of GDP (362.8) -4.0% (241.4) -2.6% (234.0) -2.1% -3.1% NG (314.5) (300.0) (286.0) -4.7% CB Restructuring (7.7) (6.1) (6.1) -0.2% 14 MNFGCs (71.0) (42.0) (28.0) -33.3% SSIs 39.3 39.2 30.9 -21.2% BSP (63.7) 1.0 1.0 0.0% GFIs 7.9 11.2 11.6 3.5% LGUs 33.5 36.9 40.3 9.2% Adjustments 13.3 18.4 2.4 -87.1%
  19. 19. Consolidated Public Sector Financial Position % of GDP Program Program P Billion -2.6
  20. 20. NG Outstanding Debt P Billion % of GDP Actual Jan-Apr Program Program … will decrease to 50.2% of GDP 50.2 50.9 5,053.4 Sovereign Credit Ratings: MOODY’S: Upgraded to Ba2 (June 15, 2011) FITCH: Upgraded to BB+ (June 23, 2011) S&P: Upgraded to BB (November 12, 2010)
  21. 21. NG Financing Program Actual Jan-May Program Program ..increasingly focus more on domestic sources
  22. 22. Reform and Advocacy Agenda
  23. 23. Policy Reforms <ul><ul><li>Deficit-Neutral (PAYGO) Bill </li></ul></ul><ul><ul><li>Fiscal Incentives Rationalization (FIR) </li></ul></ul><ul><ul><li>Sin Tax Reform + Universal Health Care </li></ul></ul><ul><ul><li>NFA Reform </li></ul></ul><ul><ul><li>PAGCOR/PCSO Privatization </li></ul></ul><ul><ul><li>Anti-smuggling Law </li></ul></ul><ul><ul><li>Rationalization of VAT Exemptions </li></ul></ul>
  24. 24. <ul><ul><li>Good Governance Advocacy: </li></ul></ul><ul><ul><ul><li>BIR -- Run Against Tax Evaders (RATE) </li></ul></ul></ul><ul><ul><ul><ul><li>BOC – Run After The Smugglers (RATS) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>DOF – Revenue Integrity Protection Service (RIPS) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>BIR – Oplan Kandado </li></ul></ul></ul></ul>
  25. 25. The Budget Cycle
  26. 26. Budget : <ul><li>Action plan of government activities and programs </li></ul><ul><li>Financial plan which reflects and supports national objectives, strategies and programs </li></ul>
  27. 27. Budget Cycle Budget Preparation Budget Accountability Budget Execution Budget Legislation
  28. 28. Allocation by Sector, 2008-2010 (In billion pesos)
  29. 29. Role of the Private Sector
  30. 30. Private Sector Participation in Promoting Socio-Economic Development <ul><li>Improve tax compliance </li></ul><ul><li>Provide inputs in monitoring the use of taxes </li></ul><ul><li>Work closely with government </li></ul>
  31. 31. Thank you…
  32. 32. Development of Philippine FiscalPolicy By RICARDO P. TOQUERO Fiscal Policy and Planning Office DEPARTMENT OF FINANCE Manila A presentation for UNIVERSITY OF THE PHILIPPINES mANILA August 3, 2011

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