IDEAS home Printed from
   My bibliography  Save this paper

Financing the MDGs and Inclusive Growth in the Time of Fiscal Consolidation


  • Manasan, Rosario G.


The progress made by the national government in consolidating its fiscal position between 2002 and 2006 proved unsustainable as its revenue effort started to go down once again in 2007 after a brief improvement in 2005-2007. With the more expansionary stance taken by the government in 2009 as part of its effort to shield the economy from the effects of the global financial and economic crisis of 2008/9, the national government fiscal deficit jumped to 3.9% of GDP in 2009 and national government debt started to rise when measured relative to GDP. Clearly, turning around the national government`s fiscal health should be high on the policy agenda. In previous episodes of fiscal consolidation, the easiest way to address the fiscal imbalance is by cutting expenditures. However, this option does not appear to be consistent with the government`s avowed commitment to achieving the Millennium Development Goals and inclusive growth. After estimating the budgetary requirements of achieving the MDGs and inclusive growth, this paper shows that national government revenues need to increase from 14.3% of GDP in 2009-2010 to 17.5%-17.9% in 2012-2016 if fiscal consolidation were to be achieved while providing the fiscal space for the much needed basic social services and infrastructure. The Aquino administration has repeatedly said that the much needed revenue increases will be derived solely from improvements in tax administration rather than from the imposition of new taxes or increases in the rate of imposition of existing taxes. The record of the BIR and BOC in increasing their revenue effort through improvements in tax administration does not inspire optimism, however. This study also cautions that tax administration improvements do not happen overnight primarily because the installation and operationalization of system-wide changes take time. Thus, it argues that there is a need for government to consider the imposition of new tax measures if fiscal consolidation is to be achieved without sacrificing the financing of MDGs and inclusive growth. The least distortionary options in this regard include: (i) the restructuring of excise tax on sin products, (ii) the rationalization of fiscal incentives, and (iii) reforming the road user charge. In addition, the government should also consider the simplification of tax structure by reducing the number of rates at which various taxes are levied or by reducing the number of taxpayers/transactions/types of income which are exempt from any given tax.

Suggested Citation

  • Manasan, Rosario G., 2010. "Financing the MDGs and Inclusive Growth in the Time of Fiscal Consolidation," Discussion Papers DP 2010-34, Philippine Institute for Development Studies.
  • Handle: RePEc:phd:dpaper:dp_2010-34

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. World Bank, 2005. "Philippines : Meeting the Infrastructure Challenges," World Bank Publications - Reports 8459, The World Bank Group.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Manasan, Rosario G., 2013. "Analysis of the President`s Budget for 2013," Discussion Papers DP 2013-31, Philippine Institute for Development Studies.
    2. Yap, Josef T. & Majuca, Ruperto P., 2013. "Aspirations and Challenges for Economic and Social Development in the Philippines Toward 2030," Discussion Papers DP 2013-27, Philippine Institute for Development Studies.
    3. Manasan, Rosario G., 2011. "Analysis of the President`s Budget for 2012," Discussion Papers DP 2011-20, Philippine Institute for Development Studies.
    4. Rosario G. Manasan, 2013. "Analysis of the President's Budget for 2013," Working Papers id:5391, eSocialSciences.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Magnoli Bocchi, Alessandro, 2008. "Rising growth, declining investment : the puzzle of the Philippines," Policy Research Working Paper Series 4472, The World Bank.
    2. Majah-Leah Ravago & James Roumasset, 2016. "The Public Economics of Electricity Policy with Philippine Applications," Working Papers 201613, University of Hawaii at Manoa, Department of Economics.
    3. Jason Patalinghug & Epictetus Patalinghug, 2019. "What Does Improved Spectrum Management Mean For The Philippines?," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 5, pages 29-35, October.
    4. Asian Development Bank Institute, 2017. "Philippines: Management of Contingent Liabilities Arising from Public-Private Partnership Projects," Working Papers id:11726, eSocialSciences.
    5. Jenny D. Balboa & Erlinda M. Medalla & Josef T. Yap, 2007. "Closer Trade and Financial Cooperation in ASEAN : Issues at the Regional and National Level with Focus on the Philippines," Trade Working Papers 21907, East Asian Bureau of Economic Research.
    6. Mouton, Morgan, 2015. "The Philippine electricity sector reform and the urban question: How metro Manila's utility is tackling urban poverty," Energy Policy, Elsevier, vol. 78(C), pages 225-234.
    7. Agnes C. Rola & Corazon L. Abansi & Rosalie Arcala-Hall & Joy C. Lizada, 2016. "Characterizing local water governance structure in the Philippines: results of the water managers’ 2013 survey," Water International, Taylor & Francis Journals, vol. 41(2), pages 231-250, March.
    8. Xun Wu & Nepomuceno A. Malaluan, 2008. "A Tale of Two Concessionaires: A Natural Experiment of Water Privatisation in Metro Manila," Urban Studies, Urban Studies Journal Limited, vol. 45(1), pages 207-229, January.
    9. Benjamin E. Diokno, 2010. "Philippine fiscal behavior in recent history," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 47(1), pages 39-87, June.
    10. Morgan Mouton, 2021. "Worlding infrastructure in the global South: Philippine experiments and the art of being ‘smart’," Urban Studies, Urban Studies Journal Limited, vol. 58(3), pages 621-638, February.
    11. Patalinghug, Epictetus, 2017. "Assessment of Planning and Programming for Capital Projects at the National and Agency Levels," Discussion Papers DP 2017-37, Philippine Institute for Development Studies.
    12. Benjamin E. Diokno, 2007. "Economic and Fiscal Policy Determinants of Public Deficits: The Philippine Case," UP School of Economics Discussion Papers 200702, University of the Philippines School of Economics.
    13. Manasan, Rosario G., 2013. "Analysis of the President`s Budget for 2013," Discussion Papers DP 2013-31, Philippine Institute for Development Studies.
    14. Rosario G. Manasan, 2013. "Analysis of the President's Budget for 2013," Working Papers id:5391, eSocialSciences.
    15. Benjamin E. Diokno, 2008. "The Philippines : Fiscal Behavior In Recent History," UP School of Economics Discussion Papers 200804, University of the Philippines School of Economics.
    16. World Bank, 2007. "Philippines : Invigorating Growth, Enhancing Its Impact," World Bank Publications - Reports 7704, The World Bank Group.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:phd:dpaper:dp_2010-34. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Aniceto Orbeta (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.