This Public Expenditure, Procurement and Financial Management Review (PEPFMR) is the first time such a process has been completed collaboratively between the Government, the Asia Development Bank and the World Bank in the Philippines, and also the first time that such an integrated report on these three related themes has been prepared We thank the Philippine authorities for their continuous support and intensive participation in this process, which involved the range of national government agencies. The authorities are to be congratulated for initiating implementation of some major reforms during the PEPFMR preparation. Examples include the enactment of the Procurement Reform Law, the restructuring of the Commission on Audit, and the introduction of the New Government Accounting System. However, as report notes, challenge abound on the revenue and expenditure fronts. The fiscal deficit increased sharply in 2002 as revenue and expenditure targets were both missed. Large public sector deficits, debt and contingent liabilities, a significant upturn in domestic interest rates in mid-2002, and a rise in global bond spreads, signal that the Philippines‘ fiscal performance will continue to remain under close scrutiny by markets.
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