The government will ask the International Monetary Fund (IMF) to treat privatization proceeds as part of its revenue stream this year, Finance Secretary Jose T. Pardo said yesterday.
In a press conference, Pardo expressed puzzlement at the IMF's position that privatization proceeds should not be classified as revenues.
While Pardo agrees that privatization proceeds are non-recurring, he maintains that they are still cash inflow that goes to the budget and is used to pay for the country's debts.
The IMF said the government should not consider privatization proceeds as part of its revenue for funding the budget deficit as this distorts the government's revenue performance.
Unfortunately for the country, Pardo pointed out, some expected revenue sources are not coming in this year as expected.
One of this is the road users' tax which was supposed to bring in P4 billion this year.
Due to massive protest by the transport sector, government was forced to compromise and agree to a deferment on the imposition of the tax and stretching out the full imposition of the tax over a four year period.
On the expenditure side, Pardo pointed out that the government has incurred additional debt obligations from the Metrorail Transit Corp. (MRT) of about $37 million this year and has a debt of about P5.2 billion to the Societe Generale de Surveillance (SGS).
Pardo expressed the view that classifying privatization proceeds any other way than as revenues would only be "fooling" ourselves because it would still go to the budget to fund the government's expenditures.
Thus, he said, "to the extent that they (IMF0 bring down revenues, then they should allow a higher deficit."
In fact, Pardo suggested the possibility that the IMF allow the Philippines a band for the deficit to the extent that privatization proceeds can be allowed as revenues. For this year, the budget deficit is set at P62.5 billion, while the privatization proceeds is projected at P22 billion.