ORIENTATON AND

OVERVIEW OF FISCAL
POLICY
JOSE ANGELO S. KARAGDAG
2020301771
DPA 412 - FISCAL POLICIES IN
DEVELOPING COUNTRIES
DR.ANTONIO M. MACARANAS, DBA,
CESO VI
FISCAL POLICY
• the sources and uses of public funds
• taxation and government spending to influence the economy
• to influence the level of collective demand in the economy
• financial objectives of price stability, full employment, and economic
development
• budgetary policy of the government
• government controlling its level of spending and tax rates within the
economy
TWO LEVELS WHEN SETTING FISCAL
POLICY IN THE GOVERNMENT

1. change the level and composition or taxation

2. change its level of spending in various sector
of the economy
THREE MAIN TYPES OF FISCAL
POLICY:
•Neutral - economy is in equilibrium
•Expansionary - spends more money
•Contractionary - pay down government debt
FISCAL POLICY IN THE
CONTEXT OF DEVELOPMENT
STRATEGY
What is development strategy?
• strategic planning
• major to making and maintaining a business.
• sets specific goals and objectives
• fit for being changed
WHAT IS THE ROLES OF FISCAL POLICY
IN DEVELOPING COUNTRIES?
• Rapid economic development
• intense role to play in a developing economy
• needs to deal with the issue of growth-cum-stability
• advancement of the greatest possible rate of capital formation
• shielding the economy from high inflation domestically
• unhealthy developments abroad
• fiscal measures must be designed to curb inflationary forces
• must be aggregative as well as segmental
WHAT IS THE PRINCIPAL OBJECTIVES OF
FISCAL POLICY IN A DEVELOPING
COUNTRIES?
• To mobilize supply for economic growth, especially for the public sector;
• To endorse economic growth in the private sector by providing incentives to
save and invest;
• To restrain inflationary forces in the economy in order to ensure price
stability; and
• To make sure reasonable distribution of revenue and wealth so that fruits of
economic growth are fairly disseminated.
COMPONENTS OF FISCAL
POLICY
1. Revenue Generation Policy
2. Expenditure Policy
3. Debt Management Policy
WHAT IS THE REVENUE GENERATION
POLICY?
• income or cash flow which does not increase the liability of the
Government
• Revenues of the government incorporate both homegrown and
external revenue, and borrowings
• established on the “capacity to pay” concept
• should be impartial and proficient
• implement and projections should be realistic
• can be raised administratively or legislatively.
WHAT ARE THE SOURCE OF REVENUE?
1. Tax Revenues - are mandatory charges or demands forced
by the government (ex. income tax, sale tax, and import
duties)
2. Non-Tax Revenues - are gathered from sources other than
compulsory tax levies (ex. cover fees and charges,
Treasury income, privatization proceeds and foreign
grants)
WHAT IS EXPENDITURE POLICY?
• a device for adequately executing public policy
• Funds are dispensed for the efficient delivery of services to
the public
• to help in economic growth by supporting priority sectors
• designates funds

The majority of government expenditure comes

predominantly from taxes
WHAT IS DEBT MANAGEMENT?

• to attain a manageable debt level.

• can bear to pay its developing liabilities as planned.
• borrowings are incurred to finance development
projects
• support for various government programs and
projects
FISCAL POLICY IN RELATION TO THE
PUBLIC FINANCE INSTITUTION
• Public Finance is the administration of a nation's
revenue, expenditures, and debt load through different
government and quasi-government institutions.
• outline of how public finances are managed
• what the different parts of public finance are
• how to effortlessly comprehend what all the numbers
mean
WHAT IS THE COMPONENTS OF
PUBLIC FINANCE?
•activities identified with collecting revenue
•making expenditure to help society
•executing a financing strategy
(ex. like issuing government debt)
WHAT IS THE MAIN COMPONENTS OF
PUBLIC FINANCE?

• Tax collection
• Budget
• Expenditures
• Deficit/Surplus
• National Debt
TAX COLLECTION
•The main source of government revenues
Tax collected by the government are;
a. sales tax,
b. income tax
c. estate tax, and
d. property tax
BUDGET
A plan of what the government means to have as
expenditures in a fiscal year
• Development Budget Coordination Committee (DBCC)
• headed by the DBM Secretary
• members are the Secretary of Finance
• NEDA Director-General
• Bangko Sentral Governor
• Office of the President for general oversight
EXPENDITURE
• everything that a government actually spends money on
• such as social programs, education, and infrastructure
• A significant part of the government’s spending is a form of
income or wealth redistribution
• toward profiting society as a whole
• expenditures may be greater than or less than the budget
DEFICIT/SURPLUS
If the government spends more than it gathers in
revenue there is a deficit in that year.

If the government has less expenditures than it collects

in taxes, there is a surplus.
NATIONAL DEBT
• If the government has a deficit (spending is more prominent
than revenue)
• subsidize the distinction by borrowing money and issuing
national debt
• Treasury is responsible for issuing debt
• when there is a deficit, the Office of Debt Management will
make the decision to sell government securities to investors
ECONOMIC IMPLICATION OF FISCAL
POLICY
• Fiscal policy influences the economy through few channels, with
shifting delays
• In the short run, it can affect the level of activity in the economy
• policy can assume a part in stabilizing economic fluctuations
• In the medium run, will likewise impact the design of the
economy
• will influence the economy’s ability to handle structural
adjustments
ECONOMIC IMPLICATION OF FISCAL
POLICY
• Major importance is the design of the tax and transfers system
• budget also play a role
• effects of fiscal policy are complex
• policymakers need to adjust a scope of contemplations
• the adequacy of fiscal policy on economic growth of developing
countries
• generally attempt to address socioeconomic issues
ECONOMIC IMPLICATION OF FISCAL
POLICY
• received less attention
• deficit and debt cutoff points on the Stability and Growth Pact
• gotten less consideration and its significance for economic
stabilization
• influence economic outcomes by either expanding or diminishing
economic activity
RELATIONSHIP OF PUBLIC
FINANCE TO THE VARIOUS
FUNCTIONS OF THE
GOVERNMENT
Fiscal Position of the Government
• mirrors the government's financial condition for the year
• may bring about a balanced budget
• budgetary surplus or a budgetary deficit
• balanced budget is accomplished if government revenues is
equivalent to the endorsed level of expenditure
WHAT COMPROMISES THE
PUBLIC SECTOR?
• the national government
• the local governments
• the Bangko Sentral ng Pilipinas
• the social security institutions
• the government owned and/or controlled corporations
these sectors are summarized to produce the consolidated
public sector resources.
WHAT ARE THE FISCAL
INSTITUTIONS IN THE
GOVERNMENT?
• Development Budget Coordination Committee
(DBCC)
• Implementing agencies
• Congress
• Commission on Audit (COA)
DEVELOPMENT BUDGET
COORDINATION COMMITTEE
(DBCC)
• the Committee entrusted to assess revenues and suggest
wellsprings of financing
• decides and suggests the yearly government expenditure
program and the sectoral and activity ceilings
• including the allotment among operating and capital outlay
expenditures
• As a fiscal body, it formulates policies governing revenues,
expenditures and debt management
DEVELOPMENT BUDGET
COORDINATION COMMITTEE
(DBCC)
The DBCC is made out of the NEDA Director-General, an
representative from the Office of the President, the Governor
of the Bangko Sentral ng Pilipinas, and the Secretaries of
Finance and Budget and Management. The Secretary of
Budget and Management serves in as the Chairman
Supporting the DBCC is the Executive Technical Board
(ETB), composed of technical staff of the same entities.
BANGKO SENTRAL NG PILIPINAS
(BSP)
• principally liable for policy direction over money, banking,
and credit
• gives controls in the stockpile of and demand for money
through bonds and borrowings
• advances and keeps up monetary stability and the
convertibility of the peso
BUREAU OF THE TREASURY
(BTR)
• principal custodian of all public government funds
• deals with the cash resources
• services public debts from domestic or foreign sources
DEPARTMENT OF BUDGET AND
MANAGEMENT (DBM)
liable for formulating and implementing the national budget
and guaranteeing the effective and sound usage of
government funds and resources.
NATIONAL ECONOMIC AND
DEVELOPMENT AUTHORITY
(NEDA)
• the planning agency of the public authority
• responsible for formulating annual and medium-term public
investment programs
• programs official development assistance
RESPECTIVE ROLES OF THE
IMPLEMENTING AGENCIES IN
FISCAL POLICY
To adequately complete fiscal policies, government agencies
help in creating and firming up macro fiscal policy at the
micro level. Agencies ordered to raise revenues include the
Bureau of Internal Revenue, Bureau of Customs, Land
Registration Commission, and other administrative offices.
The Bureau of Treasury is commanded to manage debt
policy. The remainder of the agencies actualize the
expenditure policies.
WHAT ARE THE ROLE OF
CONGRESS IN FISCAL POLICY?
• provide the legal framework for the implementation of
fiscal policies
• guarantee that fiscal policy isn't just solid yet additionally
implementable and sensible
• that the level of macroeconomic indicators and parameters
are reachable given present economic conditions
WHAT ARE THE ROLE OF
COMMISSION ON AUDIT IN
FISCAL POLICY?
• guarantees that agencies abide with the generally accepted
rules and regulations in implementing their functions
• that prepares the yearly financial report of the Government
REFERENCES:
• Introduction to Fiscal Policy | Boundless Economics (lumenlearning.com)
• Fiscal Policy - Overview of Budgetary Policy of the Government (corporatefinanceinstitute.com)
• Role of Fiscal Policy in Developing Countries (yourarticlelibrary.com)
• Objectives of Fiscal Policy in Developing Countries (yourarticlelibrary.com)
• Fiscal Policy in Relation to Overall Development Policy (ombudsman.gov.ph)
• The Budgeting Process (ombudsman.gov.ph)
• Public Finance - Overview, Example, How Government Finance Works
(corporatefinanceinstitute.com)
• The macroeconomic effects of fiscal policy (europa.eu)
• Fiscal Policy: Economic Effects (fas.org)
• The impact of fiscal policy on the economy - regjeringen.no
THANK YOU! 