The Philippines could unlock fiscal gains equivalent to between 3.6% and 7.1% of GDP each year through reforms to taxation, procurement and public spending, according to a new assessment of the country’s public finances.
The Building on Reform: Public Finance for a Rising Philippines report identifies opportunities to increase government revenues and generate savings without relying solely on higher statutory tax rates.
The proposed reforms span government procurement, tax administration, corporate incentives, fiscal management, healthcare, education and social protection, with the resulting fiscal capacity potentially available for investment in public services, economic growth and employment.
Procurement reforms could save PHP435bn annually
Among the most immediate opportunities identified are reforms that can be implemented through executive action.
These include consolidating government procurement, simplifying tax payments, streamlining corporate tax incentives and imposing tighter controls on unprogrammed appropriations.
Procurement reform alone could generate annual savings of as much as PHP435 billion, according to the report.
A second group of measures would require wider legislative and institutional changes. These include expanding electronic invoicing and tax audits, rationalising VAT exemptions and modernising fiscal management systems.
The report argues that these measures could increase revenue and improve expenditure management without raising statutory tax rates.
Zafer Mustafaoğlu, Division Director for the Philippines, Malaysia and Brunei, said the potential fiscal gains represented resources that could be redirected towards development priorities.
“The 3.6% to 7.1% of GDP in potential fiscal gains — hundreds of billions of pesos already within the system’s reach — can fuel the next chapter of that journey,” he said.
Spending reforms target health and education outcomes
The report also identifies opportunities to improve the effectiveness of existing expenditure rather than simply increasing public budgets.
Better targeting across healthcare, education and social protection programmes could improve outcomes while making more efficient use of available funding.
One proposal is the introduction of a common registry covering social programmes, which the report estimates could help lift around two million Filipinos out of poverty through improved targeting.
Other recommendations include expanding cash transfers to protect poor and vulnerable households, strengthening foundational learning and streamlining medical assistance programmes to reduce healthcare costs.
Implementation spans multiple areas of government
The scale of the potential gains means implementation would involve a broad portfolio of interconnected reform programmes rather than a single fiscal intervention.
Some measures, including procurement consolidation and improvements to tax administration, could potentially move ahead through executive action, while others depend on legislation, institutional reform and upgrades to government systems.
The findings place particular emphasis on connecting revenue reform with expenditure management, so additional fiscal capacity is accompanied by improvements in how public resources are allocated and delivered.
The report concludes that combining revenue, governance and spending reforms could provide the Philippines with additional fiscal capacity to invest in infrastructure, human capital, jobs and economic development while maintaining longer-term fiscal sustainability.
