IMF talks to focus on RP’s fiscal policy

The International Monetary Fund (IMF) said yesterday the country’s growth outlook, balance of payments and fiscal policy will be the primary focus of its discussions with Philippine economic and finance officials when they meet for the post-program monitoring (PPM) review beginning next week.

IMF resident representative Vikram Haksar said in a statement yesterday that in matters related to the Arroyo administration’s fiscal policy framework, the IMF mission also wanted to discuss measures being undertaken to strengthen tax administration.

Haksar said that the IMF was particularly concerned, among other things, with measures to broaden the revenue base and to ensure solid financial performance in the government-owned and controlled corporations as well as government financial institutions.

Tax reforms have been one of the persistent sore points between the IMF and the government as the budget deficit spiraled out of control in 2002 due mainly to the administration’s failure to contain its expenditures as well as to meet its revenue targets.

The IMF has been pressing the government to push for legislative reforms that would actually increase the tax rate over and above the improvements in the collection and administration of existing taxes.

However, the Arroyo administration has repeatedly dismissed this proposal as politically unpalatable, even more so at this time so close to the elections in May 2004.

According to the IMF, it also wants to discuss the outlook for continued reform in the power sector, including the progress with the implementation of the EPIRA and the prospects for the privatization of power sector assets.

The IMF also wants to discuss with Philippine officials the status of the banking sector reform program, including the prospects for the newly enacted Special Purpose Vehicle Law which was intended to enable banks to unload their bad loans.

After the series of meetings to take place between May 8 to 20, Haksar said the IMF mission would return to Washington and prepare a short report for consideration by the IMF executive board when it meets in August.