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IMF Praises Philippines' Fiscal Progress Under Arroyo Administration

Strategic Insights

— 1 min read

The International Monetary Fund (IMF) has hailed the significant progress made by the Arroyo administration in putting the country's fiscal house in order. During a farewell call on President Gloria Macapagal-Arroyo at the Philippine Presidential Palace, outgoing IMF resident representative Vikram Haksar cited the administration's determination to implement unpopular measures such as the expanded value-added tax (VAT) law to tackle the country's debt problem. The President reassured that her administration remains committed to implementing the law, despite opposition from legislators seeking a temporary restraining order. The IMF has promised to echo the Philippines' strides towards fiscal consolidation to the international investment community.

Key Takeaways:

  • The Arroyo administration has made tremendous progress in implementing its fiscal consolidation program, according to the IMF.
  • The expanded VAT law is projected to raise an additional P97 billion (US$1.7 billion) to P105 billion next year from the increase in VAT rate alone.
  • The law also provides for the hike in corporate income tax from 32 to 35 percent, generating an additional P28 billion to P31 billion.
  • The IMF will communicate the Philippines' fiscal progress to the international investment community.
  • President Gloria Macapagal-Arroyo stated that nowhere in the world has an economic measure projected to raise revenues of about P80 billion passed the legislature in just six months.
  • The IMF resident representative, Vikram Haksar, noted that the implementation of the fiscal consolidation program has been impressive.
  • President Arroyo emphasized that her administration has taken bold steps to address the country's debt problem.

Statistics:

  • P97 billion (US$1.7 billion) to P105 billion: additional revenue projected from the increase in VAT rate alone.
  • P28 billion to P31 billion: additional revenue generated from the hike in corporate income tax to 35 percent.
  • P80 billion: target revenue to be generated from the expanded VAT law.
  • 32 to 35 percent: the increase in corporate income tax rate.
  • 6 months: the time it took for the expanded VAT law to pass the legislature.
  • July 4: the date of the IMF's praise for the Philippines' fiscal progress.

Sources:

  • Asia Pulse (July 4)
  • International Monetary Fund (IMF)
  • Philippine News Agency (PNA)

(No date provided)

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