New Public Finance Review finds that fiscal sustainability and inclusive growth can work in tandem to lift two million Filipinos out of poverty without raising spending
MANILA, September 28, 2026 — A new World Bank Group report finds the Philippines can unlock between 3.6% and 7.1% of GDP in combined savings and additional revenue annually by broadening the tax base, improving collection efficiency, and making public spending more efficient and equitable.
Titled “Building on Reform: Public Finance for a Rising Philippines,” the report makes a clear case that fiscal sustainability and inclusive growth are mutually reinforcing— and the Philippines has both the tools and the evidence to advance both.
“Earlier this year, the Philippines crossed into upper-middle-income status, a testament to decades of hard work and sound policy,” said Zafer Mustafaoğlu, Division Director for the Philippines, Malaysia, and Brunei. “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: more children learning to read, more families shielded from the financial devastation of illness, and millions of Filipinos lifted from poverty. The World Bank is proud to be a steadfast partner to the Philippines in building the fiscal system that a rising nation deserves.”
The report identifies three categories of comprehensive reform actions that when implemented together could deliver substantial fiscal gains:
- Fiscal Space at Hand: Executive-led reforms—including consolidated procurement, easier tax payments, streamlined corporate tax incentives, and tighter limits on unprogrammed appropriations—offer the fastest route to fiscal space. Procurement reform alone could save up to PHP435 billion annually.
- Closing Fiscal Gaps: Legislative and institutional reforms could strengthen revenue and spending by expanding e-invoicing and audits, rationalizing VAT exemptions, and modernizing fiscal management systems—without raising statutory tax rates. Expanded cash transfers would protect poor and vulnerable households.
- Targeting Human Capital: Better-targeted health, education, and social protection spending could improve outcomes without increasing budgets. A common social-program registry could lift about 2 million Filipinos out of poverty, while stronger foundational learning and streamlined medical assistance could improve education and reduce health costs.
The PFR is one of the World Bank Group’s core diagnostic instruments, designed to assess the efficiency and effectiveness of a country’s fiscal policies. It helps member countries identify reforms that raise more revenue, spend more effectively, and create the fiscal space needed to invest in people, growth, and jobs — spanning everything from tax reform, governance institutional reforms, to health and education financing.
