Fiscal Measures in the Horizon

The national government is bent on achieving a balanced budget by 2009. By that time, the national government will no longer borrow funds to finance its expenses. This means goodbye to deficits.

To do this, revenues must be increased and expenditures must be reduced. On the revenue side, some taxes are proposed, including a tax on text messaging. On the expenditure side, functions devolved to local government units will no longer be funded by the national government. Also, the administration will push for the passage of a Fiscal Responsibility Bill which will ensure that new expenditures won't be approved without new taxes.

These proposals come at a time when a fresh mandate is expected to be given to the current administration (all indications point to the proclamation of Pres. Gloria Macapagal-Arroyo as our President from June 30, 2004 to June 30, 2010).

Given the time-frame of 2009 and 2010, Pres. GMA has only two years within which to operate with a balanced budget.

With this scenario, it's going to be a tough 6 years ahead.

We will see a government grappling with the difficulties of cutting the “fat” in the number of employees in the bureaucracy and the fat of the “pork barrel”.

The national government will continue to borrow to finance its deficit and this exerts an upward pressure on interest rates. High interest rates drive down investments, tend to push inflation and endanger the stability of the foreign exchange rate.

The fiscal measures in the horizon will certainly require a lot of sacrifices from those who can contribute to the revenue generation measure. It will also require efficient ways of using the budget of the national government.