The International Monetary Fund (IMF) has issued a statement at the conclusion of its discussions with the Philippines under Article IV of its articles of association.

The economic outlook is favorable in spite of weaker global growth. Real GDP is estimated to grow by 6.7% in 2015 and 6.3% in 2016. Exports are however likely to be weaker because the growth rates of trading partners are relatively weak.

In the view of the IMF fiscal policy should concentrate on the support of infrastructure investment and inclusive growth. The development of infrastructure is supported by increased public spending in the 2015 budget and a number of Public Private Partnership projects that still need to be implemented. However to support higher spending on infrastructure and social needs in the medium term the government must raise additional revenue.

The IMF therefore supports a comprehensive tax reform package that will increase revenue. The IMF considers that the government should not put through any tax package such as the lowering of personal tax rates without also raising revenue by rationalizing exemptions and incentives. Tax reductions should also be paid for by increases in excise taxes.

The report notes that the IMF mission supports the efforts by the Finance Department to permit the tax authorities to access the bank deposit information of taxpayers and to increase the severity of criminal penalties for tax evasion. These measures are considered to lead to an improvement in the efficiency and the equity of tax collection.

The IMF also supports the amendments to the Charter of the Central Bank (BSP) to increase its effectiveness. The measures include higher capitalization, income tax exemption and enhancement of its supervisory powers.