Metro Manila (CNN Philippines, May 3) — Finance Secretary Carlos Dominguez III appealed to the Asian Development Bank (ADB) to lend more money to developing states like the Philippines to fast-track economic rebound, even as the regional lender told ministers to focus instead on raising more taxes to fund recovery programs.
“In order to be responsive to critical needs, the Asian Development Bank must level up. Specifically, there is a need for the bank to seriously consider a substantial expansion in its loan portfolio in the next five-year period,” Dominguez said during the Governors’ Seminar on Monday. “This will effectively support its member-countries’ recovery even if this brings forward the need for a capital increase.”
The Philippines’ public debt reached ₱10.77 trillion as of March, 27% higher compared to a year ago, according to Treasury data. Of the amount, ₱3 trillion is sourced from lenders outside the country.
ADB President Masatsugu Asakawa said during the opening event of the three-day 54th Annual Meeting of the ADB Board of Governors that developing countries are “under enormous pressure on budget and public debt” and should do what they can to limit their exposure to interest rate and exchange rate fluctuations, which often make foreign currency-denominated loans more costly to settle.
“It will be a good idea for any developing country try to rely on more and more domestic resources by reducing their dependency on external financing,” Asakawa said during the opening ceremony. “There is much, much room for them to increase by restructuring their tax policy or enhancing tax administration capacity.”
The Philippines recently passed several measures that would reduce the government’s tax take, namely the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act which slashed the corporate income tax rate to 25% from the previous 30%, and the reduction of pork import tariffs which will forgo ₱13.68 billion in revenues.
Asakawa particularly noted that multinational companies that will set up shop in developing Asia should “pay the fair amount of tax” relative to profits they generate, and that future public investments should go into education, health, and other social protection programs.
To assist governments in improving local tax policies, ADB on Monday night led the creation of a regional tax hub meant to provide a platform for coordination and sharing of best practices among member economies to boost revenue collections.
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