Press Release
September 28, 2008

AMID GLOBAL FINANCIAL CRISIS, GFIS, BANKS MUST BE ASSESSED - ANGARA
Emergency Consultative meeting to be convened

Senator Edgardo J. Angara today seeks to convene an emergency consultative meeting to assess the capability and strength of Government Financial Institutions (GFIs), to weather the global financial turbulence.

In the Philippines, local stocks plunged over the investors' reaction on the fall of Wall Street financial giants.

Officials from the Bangko Sentral ng Pilipinas, the Department of Finance, the National Economic and Development Authority, and all banking and financial organizations are invited to an emergency consultative meeting to explain the implications and the global financial crisis effects on the Philippine financial market and the Philippine economy.

"We must be able to assess the strength and the capability of our financial system. In order to cope with the challenges of a slowing global economy and escalating food and fuel prices, the government must strengthen its macroeconomic policies both by rationalizing fiscal incentives and curbing tax evasion," said Angara.

He added, "I am in favor of granting fiscal incentives to encourage direct investments in the country, especially if it will develop the country's economy. Pero minsan inaabuso na tayo (But sometimes our policy is being abused). That's why we have to set the parameters of fiscal incentives in the country."

This includes the rationalization of the incentive schemes and review of the tax waivers and tax breaks that the government give away every year. He added that the country is losing a quarter of billion pesos from tax waivers and breaks.

He further called on for the review of industries that do not need tax breaks and the redirection of revenues from income-generating agencies such as Philippine Amusement and Gaming Corp., the Philippine Charity Sweepstakes Office, the Ninoy Aquino International Airport Authority, and the Philippine Tourism Authority, among others.

"Their income can amount to over a billion pesos, and these can build all the schools and buy all the books that we need. Philippine competitiveness has steadily and consistently slipped as a result of our measly investment on education, health, research and development and basic infrastructure. We need to step up public spending in these areas," he added.

The Asian Development Bank, through its economic report Asian Development Outlook (ADO) update, stated yesterday that expanding the country's tax revenue base and posting a higher revenue growth will result to achieving global investors' confidence and will allow greater expenditure on infrastructure and development. These fiscal initiatives, according to ADO, will cushion the negative impacts of the US crisis and provide RP a better position to respond to this crisis.

Angara is also pushing for the removal of the automatic guarantee by the national government of loans secured by government-owned and controlled corporations. He cited NFA which has an estimated 50 billion in outstanding loans, worse, NFA officials do not care on how to find ways of repaying the loan because the government has guaranteed it. Under the present system, GOCCs credit worthiness is not reviewed prior to approval of the loan.

"If you improve tax administration coupled with the improvement of the financial system, your tax base would become broader and your tax effort will be on autopilot. By being wise and discriminating about granting fiscal incentives, we encourage direct investments in the country which will bolster the country's economy amid the recent financial turmoil in the US," said Angara.

On Monday, the Senate Committee on Banks, Financial Institutions and Currencies headed by Angara will preside over the meeting to be attended by government financial authorities and representatives from the banking system.

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