IMF pushes consolidation, flags key tax reforms

The International Monetary Fund (IMF) has urged Philippine authorities to pursue gradual fiscal consolidation over the medium term to rebuild fiscal space, support external balance and ensure debt sustainability.

- By KEISHA TA-ASAN

The multilateral lender also flagged the need to underpin the country's fiscal targets with concrete tax and expenditure measures.

In its staff report for the 2025 Article IV Consultation, the IMF said "the authorities should implement gradual fiscal consolidation, in line with their targets, to reinforce fiscal space and support external balance."

Under the government's medium-term fiscal framework or MTFF, the IMF noted that the fiscal deficit is projected to decline to 3.1 percent of gross domestic product by 2030. This would require an annual reduction of about 0.5 to 0.6 percentage point of GDP in the overall deficit from 2027 to 2030.

"With no new tax policy measures, staff's baseline projections for 2027 to 2028 assume the consolidation will be achieved largely through lower spending," the IMF said.

Despite this, the Fund expects the country's debt position to improve. "Staff projects national government debt to decline gradually to about 60 percent of GDP by 2030, supported by a favorable interest rate-growth differential," it said.