MANILA, Philippines?The Asian Development Bank has urged the Philippine government to implement a solid program aimed at resolving chronic tax collection woes, hoping to see an improved fiscal situation for the country by 2010.

ADB chief economist Jong Wha Lee said Asian governments should continue to have an accommodative policy in 2010, particularly by spending more on infrastructure and social services. He said economies needed pump-priming to achieve modest growth.

Given the need for higher public spending, Lee said, it would be understandable if governments continue to post relatively high deficits in 2010.

He said markets would only tolerate deficits if these were caused by external factors, particularly the global turmoil which had to be countered by higher spending.

Deficits that are brought about by ?structural? problems, such as inefficient tax collection system, should be addressed for economies like the Philippines to avoid turning off investors.

?There has to be measures to address structural problems and improve tax collection,? Lee said.

In the first 10 months of the year, the Philippine government registered a budget deficit of P266 billion, breaching the supposed P250-billion ceiling set for the entire year.

The higher-than-expected deficit was caused largely by the failure of the Bureau of Internal Revenue to meet its monthly tax collection goals.

Tax authorities blamed laws that granted tax relief for the anemic tax collection. These include the exemption of minimum wage earners from the income tax and the reduction of the corporate income tax rate from 35 to 30 percent.

However, critics said the low tax collection was also due to unresolved corruption in the government?s leading revenue collection agency.

Given the government?s fiscal performance as of October, the Department of Finance said the actual deficit by the end of the year could reach P300 billion.

Last year, the deficit was only P68.1 billion.

The government had targeted to start registering a balanced budget by 2008. However, the DOF had set aside this goal given the global economic turmoil, which dragged down economic growth.

Finance officials said the government needed to boost public spending to help avoid a recession.

The Philippines has succeeded in avoiding a recession. It posted a 0.7-percent growth in the first three quarters of the year.

The DOF said the government was now targeting to post zero deficit by 2013.