Government sets Q3 domestic borrowing at P135B

DAVAO CITY—The government would be borrowing P135 billion from the domestic market in the third quarter through the sale of Treasury bills and bonds, National Treasurer Roberto B. Tan said.

Tan told reporters the Treasury does not expect any changes in the borrowing program for the rest of the year since the implementation of the 2016 national budget was still in full swing. He said, however, the bureau has yet to inform incoming Finance Secretary Carlos G. Dominguez about the borrowing program for the initial quarter of the Duterte administration.

Tan said the volume of debt paper to be sold starting July would match the volumes offered in the first two quarters of the year. For the first and second quarters, the government had programmed to sell P20 billion in T-bills per month and P25 billion in T-bonds per month.

The government had planned to access 84.5 percent of its funding requirements this year from the local market.

The National Treasurer also said the plan to cap the budget deficit at 3 percent of the gross domestic product, as earlier disclosed by President-elect Rodrigo R. Duterte’s economic team, would be implemented next year.

He said the incoming administration would prioritize a comprehensive tax reform system. This move was to stabilize the country’s finances, which would expectedly take a hit from plans to bring down income tax rates.

At the “Sulong Pilipinas: Hakbang Tungo sa Kaunlaran” consultative meeting between businessmen and Duterte’s economic managers here on Monday, Dominguez said the new administration would review the country’s current tax system. He said the Duterte administration would eventually lower the corporate and individual tax rates, which, currently at 30 percent and 32 percent respectively, were among the highest in the region.

To compensate for the revenue leaks from lowering the income taxes, Dominguez said the team would look at trimming a long list of VAT exemptions.

Dominguez and incoming Budget chief Benjamin E. Diokno also mentioned the possibility of adjusting the excise taxes slapped on fuel, which had remained unchanged for almost two decades.

Diokno said the new administration would also push for the rationalization of fiscal incentives for investors, noting there were currently about 200 laws allowing the grant of tax perks.