One of the most important tasks that need to be addressed in order to achieve macroeconomic stabilization is to put order in the fiscal house. The large budget deficits incurred as a result of the fiscal stimulus during the global economic and financial crisis resulted in the need for fiscal consolidation. At the same time, the reduction of spending for infrastructure and social services as a result of the government's expenditure compression efforts in 2002 to 2006, has resulted in large financing gaps in these areas. These financing gaps, in turn, not only constrained the country's economic growth, but also limited the access of the poor to the economic gains the country has achieved. The challenge in the medium term, therefore, is one of achieving fiscal consolidation, while at the same time substantially increasing the country's investments in infrastructure, health, and education.
The overall strategy in the fiscal sector in the medium term is to increase tax effort to 15.6 percent of GDP. This is to be achieved through an annual incremental 0.3 percentage point annual rise in the collection effort of BIR, and 0.1 percentage pointfor the BOC. At the same time, non tax revenue collection would be increasing equivalent to an average of 1.2 percent of GDP through governance reforms. Correspondingly, the NG deficit should decline to a level of 2 percent of GDP by 2013 and must be maintained at this level until 2016. Also, beginning 2013, the consolidated public sector deficit must be brought down to 1.5 percent of GDP. The specific strategies and programs designed at achieving the abovementioned targets are detailed below.