The World Bank is expected to approve by March a $450-million loan for the Philippines that will be used by the government in improving fiscal management.
Documents showed that the development policy financing would be tackled by the board of the Washington-based multilateral lender on March 14.
“The development policy loan aims to support the high-level objective of the government of the Philippines to improve fiscal management with three development objectives: strengthening tax policy; enhancing public finance management and budget planning, and strengthening financial risk management of public assets,” the World Bank said.
The document noted that relative to its Asean neighbors as well as emerging market peers, the Philippines remained having among the lowest share of revenues and taxes to the gross domestic product (GDP) to date, which the World Bank said “constrained in the past the fiscal space for spending on development priorities.”
The World Bank said the proposed loan would “address key policy and institutional bottlenecks in support of the government in strengthening tax policy, enhancing budget and public financial management, and improving fiscal risk management against climate and disaster shocks.”
It noted that the Philippine government was in the process of passing the comprehensive tax reform program “with the objective of raising the necessary revenue to expand public investment that would lead to more inclusive growth.”
The first package is the Tax Reform for Acceleration and Inclusion (TRAIN) Act signed into law in 2017, which raised or slapped new excise taxes on consumption while rationalizing the personal income tax structure that led to increased take-home pay of taxpayers.
Five more tax packages were pending in Congress for approval.—BEN O. DE VERA