Philippines urged to open up fiscal space to fund social protection programs

by Czeriza Valencia (The Philippine Star) – Feb 15, 2019

MANILA, Philippines — The Philippines is among six countries in the Asia-Pacific region that need to open up new fiscal space to fund the minimum required investments in social protection under the Sustainable Development Goals (SDG) agenda, according to a new report by the Asian Development Bank (ADB).

The report, titled “Asia’s Fiscal Challenge: Finding the Social Protection Agenda of the SDGs,” surveyed the fiscal situation of 16 countries in the region and identified the challenges they face in building and expanding their social welfare programs.

ADB said countries in the region have a good chance of achieving the social protection agenda under the SDG if the right fiscal reforms and policies are in place.

Of these countries, several, including the Philippines, have around 20 percent of their population living below the national poverty line, thus necessitating greater spending power for social welfare programs.

Other than the Philippines, the five other countries that need to open new fiscal space to meet minimum requirements in funding social investments under the SDG agenda include India, Indonesia, Kazakhstan, Nepal and Sri Lanka.

Six other countries in region (Azerbaijan, Malaysia, Mongolia, PRC, Thailand, and Vietnam) should be able to meet their social protection agenda requirements with lesser effort as expenditure falls within the limit of their current fiscal deficit.

“Many countries still face considerable challenges in creating the sustainable financing needed for their social welfare program, the bedrock for the success of the social protection agenda under the SDGs,” said Woochong UM, director general of ADB’s Sustainable Development and Climate Change Department.

The social protection agenda under the SDGs has four dimensions: provision of cash transfers for income security, health services, education services, and other essential goods and services.

Some of the potential sources of revenue mobilization for these countries, according to the report include increasing tax efforts, reallocating energy subsidies, and reallocating natural resource taxes.

“Majority of the countries in the study will have to revamp their policies and open new fiscal space, while some exhibit capability in using existing resources to increase their revenues without dramatically increasing tax rates or introducing new taxes,” said ADB principal social development specialist Sri Wening.

ADB said developing countries in Asia have expanded their social protection programs, but are challenged by creating sustainable financing.

The Philippines, for instance, continues to be challenged by limited coverage of social insurance, covering only half of the population to date.

Health coverage by government insurance also remains be limited.

“In particular, Myanmar, Nepal, the Philippines and Thailand could generate considerable revenues from increased tax effort and reallocation of energy subsidies,” the report said.