The World Bank is looking into extending a $300-million loan to the Philippines to finance a project aimed at improving fiscal management.
Documents showed that the project, expected to be tackled by the Washington-based multilateral lender’s board in December, will help increase the revenue potential as well as economic efficiency of tax policy.
Also, the loan will be aimed at improving budget planning and execution efficiency of spending, on top of strengthening the financial risk management of public assets, the World Bank said.
The lender said the proposed development policy loan would form part of its country partnership strategy with the Philippines supportive of budget and fiscal reforms.
Once the project is implemented, the World Bank said “tax revenue is expected to increase through a set of tax reforms aimed at improving the equity, efficiency, and simplicity of tax system towards a low-rate and broad-based system.”
“The specific measures supported by the development policy loan in the prior action on tax policy are expected to lead to higher tax revenue collection from excise tax on petroleum and the VAT (value-added tax). These reforms would increase the needed fiscal space for higher investment in physical and human capital that would ultimately help achieve more inclusive growth,” the World Bank said.
The World Bank added that “supported budget reforms are expected to ensure that the additional revenue raised by the tax reforms will be used more effectively and transparently” under the loan proposal.
“Finally, prior action that strengthens the management of fiscal risks in relation to the impact of natural disaster on public assets will result in better disaster risk financing, including the establishment of key institutions and risk insurance instruments,” according to the World Bank. —BEN O. DE VERA