Just like all other governments, the Philippines government is also trying hard to keep its finance and economy in a stable state. The primary objective of the government is to tame inflation by improving the financial infrastructure.
It is for decades now that the economists tried to find out the reason as to why the Philippines was doing so badly in the finance market in comparison to the world’s economy in spite of the fact that it is more gifted and resourceful than its neighbors.
A lot of studies conducted in recent years on how the neighbors were doing so well showed that the economy has grown briskly and there is not much of intolerable inflation. However, it also showed that:
- There has been too much borrowing from abroad
- The stagnant investment led to such extensive borrowings
- The inferior infrastructure led to indiscriminate spending and
- A narrow business base.
Based on these findings, the economists have urged and have been urging the government for a long time now to be more careful and thoughtful in the following aspects such as:
- To balance between the income and expenditure schedule
- They have also suggested the government to expand the industrial base rather than focusing and putting all efforts on services.
They say that this will help them to maintain a proper balance as well as an impressive speed instead of having to hop skip and jump between alternatives.
However, things are easier said than done, considering the present technology financial scenario of the Philippines and there are several reasons for that.
- Balance is at risk as the inflation hit 6.7% which is close to the highest rate in the decade. This rate is much higher than the 2 to 4% target set by the central bank.
- Add to that, the current account balance also posted a very narrow deficit and is been growing since. This account balance, however, remained in surplus for the last 13 consecutive years which is the result of the strong remittances from the emigrants especially the caregivers, cleaners, nurses and the likes.
- The loss of the stock market over a fifth of its worth also reached to the peak which is another reason that financial development work is so slow in the Philippines.
However, the fact that the growth in the economy has remained impressive at 6.1% in the third quarter as it was a year before compared to the international standards has not affected the economy in a positive way. This is because this rate is at a three-year low.
Review of the literature
The government has over the years review its public finance literature to find the loopholes that have been hindering the steady economic growth of the Philippines. In this review, there are a lot of areas that were found lacking improvement. A few of these are as follows:
- Taxation is by far the most affected area on public finance and needed immediate reforms
- There is also an immediate amendment in the government expenditure
- The process of making the budget must be more effective and foolproof and
- The areas of public debt arena need more control and governance.
Over the years the government has increased the volume of such studies and are taking clues from different other governments finance policies as well as the policies and functioning of the money market. These studies involve:
- All different central banks and financial institutions of different countries
- They are also keen on reviewing and making necessary amendments in the private money lending market taking cues from reliable and reputable private money lenders of different countries
- They are even keen on taking a fair idea about different relief programs from different government sources and sites such as com and others and implementing them in their future programs to provide some relief to the consumers, especially the business sectors.
All these studies have pointed out the areas of weaknesses in their public financing policy and have thereby proposed numerous research projects.
The primary objective
The primary objective and the main focus of the Philippines government is to take the initial step to reduce if not eliminate the gap between public finance and policy-making by the government authorities. The review on the existing literature regarding this aspect of public finance was therefore divided into four distinct areas such as:
- Taxation – This being the primary source of the government and raising taxes is not the only effective way to raise government income
- Expenditures – This being one of the most significant aspects of public finance that affects the infrastructure, defense and all other aspects of a country
- Budget – This is also the most significant aspect of the government fund management and therefore requires an immaculate and strategic process and
- Public debt – Another significant area to keep government finance under control and prevent the country to fall into the deep black hole of debts.
To make sure that these areas are governed just as it is required by the government it is required to start from the basics and look into every aspect from a historical perspective. In addition to that, it is also required to conduct several other studies and research to find out the issues in different policies of government funding and collections as well.
Experts say that it is also required to study and analyze different sub-topics of the policies. Some of the most significant ones amongst others are:
- The tax effort of both the government as well as the citizens
- The effects of allocation of taxation on different areas
- The taxation itself and its effects on inflation
- The fiscal incidence
- The budget process and its effects on economic development and
- Determining the optimal level of public debt.
Therefore, it is high time that the government takes a few effective if not drastic steps to get the economy back on track. This will help the government in the upcoming elections as well to build a strong foundation for another term at the helm. However, it is the popularity of the president, Rodrigo Deterge has helped the government to achieve a few milestones in this tedious and time taking process.