MANILA, Philippines - Monetary authorities urged the incoming Aquino administration to lay down a clear cut fiscal consolidation plan to help sustain the stronger-than-expected economic growth registered in the first quarter of the year.
Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said in an interview with reporters over the weekend that the next government should be able to ensure fiscal sustainability during its six-year term.
Guinigundo said the viability of the fiscal consolidation plan would depend on the collection of higher revenues and strengthened but controlled expenditures.
“It may or may not involve new taxes it may or may not involve better tax administration but it can be a combination of those two either new taxes or better tax administration well that will translate to better public finances,” he added.
According to him, the next administration should also make sure that expenditures would go to the actual recipients such as education, agriculture, social services, and other sectors.
“I am all for higher spending of the government because the economy needs it. Many social sectors need higher government expenditure but then again that should be complemented and supported by higher revenues,” he clarified.
The BSP official said another crucial factor is the ability of the administration of President-elect Benigno “Noynoy” Aquino III to communicate to investors about the viability of its fiscal consolidation plan.
“Another important aspect is for the government to be able to announce a very good fiscal consolidation program. If indeed for 2010 and for 2011 would prove to be very difficult years that would mean more expenditure,” he said.
According to him, investors would understand if the Philippines would breach its budget deficit to gross domestic product (GDP) targets over the next two years due to the impact of the global economic meltdown.