upmanila lecture11dof
DESCRIPTION
Econ 151, ppt, Sir Mesina, CAS-UPMTRANSCRIPT
Development of Development of Philippine Fiscal Policy Philippine Fiscal Policy
OUTLINE OF PRESENTATIONOUTLINE OF PRESENTATION
Definition of ConceptsDefinition of ConceptsDOF MandateDOF MandateFiscal AccountsFiscal AccountsReform and Advocacy Agenda Reform and Advocacy Agenda The Budget CycleThe Budget CycleRole of the Private SectorRole of the Private Sector
2
Definition of ConceptsDefinition of Concepts
3
4
Definition of Public Policy:Definition of Public Policy:
- - generally the principled guide to generally the principled guide to action taken by the administrative action taken by the administrative or executive branches of the state or executive branches of the state with regard to issues in a mannerwith regard to issues in a manner consistent with law and institutional consistent with law and institutional customs. customs.
4
5
Public Policy (Continued):Public Policy (Continued):
- - a system of courses of action, a system of courses of action, regulatory measures, laws and regulatory measures, laws and funding priorities promulgated funding priorities promulgated by a governmental entity or its by a governmental entity or its representatives.representatives.
66
Fiscal Policy Fiscal Policy ::
- - a government policy with regard a government policy with regard to its resource generation and to its resource generation and spending activities.spending activities.
777
Fiscal Consolidation:Fiscal Consolidation:
- a determined effort to bring down the - a determined effort to bring down the budget deficit.budget deficit.
8
Two Components of Fiscal Policy:Two Components of Fiscal Policy:
1. Revenue component – Obtaining funds for government operation by collecting taxes, fees and charges and/or borrowing
2. Expenditure component – Spending of funds to provide goods and services
9
DOF MandateDOF Mandate
Formulation, institutionalization and administration of fiscal policies;
Generation and management of the financial resources of government;
Supervision of the revenue operations of all local government units;
Review, approval and management of all public sector debt, domestic or foreign;
Rationalization, privatization and public accountability of corporations and assets owned, controlled or acquired by the government.
Under Executive Orders 127, 127A and 292Under Executive Orders 127, 127A and 292
10
Two Major Fiscal Agencies: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.
11
The Fiscal AccountsThe Fiscal Accounts
12
Basic Elements of Fiscal AccountsBasic Elements of Fiscal Accounts
RevenuesRevenues
ExpendituresExpenditures
FinancingFinancing
13
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, Components of Revenues, Expenditures and FinancingExpenditures and Financing
(Philippine Fiscal Accounts)(Philippine Fiscal Accounts)
REVENUES: Tax Revenues: BIR, BOC, Other Offices (e.g. Environmental Tax, Immigration Tax, Travel Tax) Non-Tax Revenues: ( privatization, fees and charges, dividend from GOCCs, grants for projects/programs )
14
Modes of FinancingModes of Financing
Domestic BorrowingDomestic Borrowing Central Bank (monetization)Central Bank (monetization) Bank Financing ( mostly gov’t corporate Bank Financing ( mostly gov’t corporate
sector borrowings)sector borrowings) Non-bank Financing (e.g. gov’t. securities: Non-bank Financing (e.g. gov’t. securities:
T-Bills; T-Notes & T-Bonds)T-Bills; T-Notes & T-Bonds)
Foreign BorrowingForeign Borrowing Official (Bilateral); Multilateral (IMF, World Official (Bilateral); Multilateral (IMF, World
Bank) and Commercial LoansBank) and Commercial Loans
15
FISCAL DEFICIT Creates Macroeconomic FISCAL DEFICIT Creates Macroeconomic Impact Impact - - Depends on how it is financedDepends on how it is financed
InflationInflationInterest RatesInterest Rates““Crowding Out” EffectCrowding Out” EffectExternal PositionExternal Position
- reduced reserves, increased debt, potential BOP problem
16
17
2012 NG Fiscal Program2012 NG Fiscal Program
In Billion Pesos2010 2011 2012 Growth Rate
Actual Program Program (2012/2011)
Total Revenues % of GDP
1,207.913.4%
1,411.314.2%
1,568.514.2%
11.1%
Tax Revenues % of GDP
1,093.612.1%
1,273.212.8%
1,445.513.1%
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%
17
18
In Billion Pesos2010
Actual2011
Program2012
ProgramGrowth 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%
Consolidated Public Sector Financial PositionConsolidated Public Sector Financial Position
19
Consolidated Public Sector Financial PositionConsolidated Public Sector Financial Position% of GDP
ProgramProgram
(234.0) (362.8) (240.1) (206.6)
-3.0
-4.0
-2.1
-500.0
-400.0
-300.0
-200.0
-100.0
0.0
100.0
2009 2010 2011 2012
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
P Billion
-2.6
20
NG Outstanding DebtNG Outstanding Debt
5,523.3
4,705.64,718.2
4,396.6
54.8
52.451.3
4,000.0
4,500.0
5,000.0
5,500.0
6,000.0
2009 2010 2011 2011 2012
40.0
45.0
50.0
55.0
60.0
P Billion % of GDP
ActualJan-Apr
Program Program
…will decrease to 50.2% of GDP
50.250.9
5,053.4
Sovereign Credit Ratings:Sovereign Credit Ratings:
MOODY’S: MOODY’S: Upgraded to Ba2 (June 15, 2011)
FITCH: FITCH: Upgraded to BB+ (June 23, 2011)
S&P: S&P: Upgraded to BB (November 12, 2010)
Sovereign Credit Ratings:Sovereign Credit Ratings:
MOODY’S: MOODY’S: Upgraded to Ba2 (June 15, 2011)
FITCH: FITCH: Upgraded to BB+ (June 23, 2011)
S&P: S&P: Upgraded to BB (November 12, 2010)
21
NG Financing ProgramNG Financing Program
0%
20%
40%
60%
80%
100%
2009 2010 2011 2011 2012
56%66%
74%
52%
75%
44%34%
26%
48%
25%
Domestic Foreign
ActualJan-May
Program Program
..increasingly focus more on domestic sources
Reform and Advocacy AgendaReform and Advocacy Agenda
22
23
Policy ReformsPolicy Reforms
Deficit-Neutral (PAYGO) Bill
Fiscal Incentives Rationalization (FIR)
Sin Tax Reform + Universal Health Care
NFA Reform
PAGCOR/PCSO Privatization
Anti-smuggling Law
Rationalization of VAT Exemptions
24
Good Governance Advocacy:Good Governance Advocacy:
BIR -- Run Against Tax Evaders (RATE)
BOC – Run After The Smugglers (RATS)
DOF – Revenue Integrity Protection Service (RIPS)
BIR – Oplan Kandado
The Budget CycleThe Budget Cycle
25
BudgetBudget::
Action plan of government activities and programs
Financial plan which reflects and supports national objectives, strategies and programs
26
Budget CycleBudget Cycle
BudgetPreparation
BudgetAccountability
BudgetExecution
BudgetLegislation
27
Allocation by Sector, 2008-2010Allocation by Sector, 2008-2010(In billion pesos)(In billion pesos)
28
Role of the Private SectorRole of the Private Sector
29
Private Sector Participation in Promoting Private Sector Participation in Promoting Socio-Economic DevelopmentSocio-Economic Development
Improve tax compliance
Provide inputs in monitoring the use of taxes
Work closely with government
30
Thank Thank you…you…
31
Development of Development of Philippine FiscalPolicyPhilippine FiscalPolicy
By
RICARDO P. TOQUEROFiscal Policy and Planning Office
DEPARTMENT OF FINANCEManila
A presentation for
UNIVERSITY OF THE PHILIPPINES mANILA August 3, 2011