IMF, MCC sign accord to help reform BIR

WASHINGTON – The US government’s Millennium Challenge Corp. (MCC) and the International Monetary Fund (IMF) have signed a partnership agreement to provide capacity-building support for the reform and modernization of tax administration in the Philippines to increase revenue collection and reduce opportunities for corruption.

Under the agreement, MCC will contribute $4.6 million for technical assistance by the IMF’s Fiscal Affairs Department to help the Philippines Bureau of Internal Revenue (BIR) improve its policies and procedures, said an MCC press statement on Wednesday.

The funding will pay for a resident advisor to the BIR and a significant number of short-term technical assistance missions by IMF experts to assist with a wide variety of technical tax administration issues.

This is the first technical assistance agreement between the IMF and the United States.

An IMF assessment mission is scheduled to visit Manila next month and the expectation is that the resident advisor could be in place before the end of 2010.

The funding is part of MCC’s $434 million poverty reduction compact with the Philippines which includes a $54.3-million investment to computerize and streamline business processes in the BIR.

Murilo Portugal, IMF deputy managing director, said the agreement with MCC sets the stage for a strong partnership between the Fund and the US government.

“We warmly welcome the United States as a donor to the Fund’s technical assistance program and look forward to working together for the benefit of the Philippines,” he said.

Patrick Fine, MCC vice president described the agreement as a milestone and said it “will serve as a solid foundation for success in reforming the Philippines’ Bureau of Internal Revenue, as well as a solid foundation for productive collaboration between the IMF and MCC.”

The Philippines signed the compact aimed at reducing poverty through economic growth with the MCC in New York on Sept. 24. The signing ceremony was officiated by President Aquino who was in New York for the UN General Assembly session and Secretary of State Hillary Clinton.

The IMF will submit an annual report to MCC on the BIR’s commitment to reform beginning in early 2012.