Date:
May 2003
IMF
Team Wraps Up its Latest Review
A
visiting mission from the International monetary
Fund (IMF), here as part of the IMF twice-yearly
review of economic performance, has urged
the Philippines. Government to make an increased
effort to boost public finances. In a briefing
to the press at the end of its consultations,
the mission said, "improving (the) public
fiscal position continued to be the country's
key policy challenge." "Adhering to the target
deficit for 2003 would be an important first
step for the country in arresting the deterioration
of government revenue raising as a percentage
of gross domestic product." The IMF team called
for a balanced budget by 2009 and for further
reform to the public service.
The current IMF post-program monitoring arrangement
is due to expire at the end of 2004. The United
States is keen to see the Philippines renew
the arrangement, which is generally favored
by lending agencies that administer aid funds.
Not all agree however. According to some recent
reports, the Philippines is not keen to extend
the IMF monitoring program and wants to "graduate"
after being subject to monitoring for the
past 23 years. For one, Neda Chief, Romulo
Neri wants a quick exit from the IMF surveillance
program. Others however, support the US position
and claim that investors would be more comfortable
in coming to the Philippines with the IMF
program remaining in place.
In responding to the latest IMF recommendations,
the Bangko Sentral Ng Pilipinas (BSP) said
it believes that the current account position
of the Philippines is in no danger and will
remain in surplus by around US$2.4 billion.
The country's balance of payments (BOP) position
should also register a surplus this year of
between US$100 - US$200 million.
The IMF has predicted that economic growth
in the Philippines could slow to around four
percent for 2003 and it was therefore with
some satisfaction that senior government officials
released preliminary data suggesting that
economic growth in the first quarter is expected
to come in at around 4.6% on an annualized
basis. The NEDA had earlier forecast a growth
target for the period of between 4.0 and 4.5
percent. Economic growth in 2002 was 4.6 percent
and was the best result since the Asian financial
crisis of 1997-8.
There are late reports that the BSP may revise
these estimates towards a deficit of around
US$500 million as a result of capital outflows
from maturing foreign loans and the government's
recent decision to borrow from the local market
which means inflows will be less than expected.
There are late reports
that the BSP may revise these estimates towards
a deficit of around US$500 million as a result
of capital outflows from maturing foreign
loans and the government’s recent decision
to borrow from the local market which means
inflows will be less than expected.
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