CHICAGO (JGL) – The International Monetary Fund (IMF) said the next Philippine government in 2016 will “lift the country’s growth potential” by continuing to “institutionalize governance reforms and fiscal transparency and initiate economic reforms” put in place by the outgoing Aquino government.
In its annual review of the Philippine economic outlook, based on the 2015 Article IV Consultation between the Philippines and the IMF, the IMF said in its 75-page report of Aug. 26 that despite the slow economic growth in the first quarter of 2015 due to “dry weather on agricultural production, weak global demand for exports, and slow budget execution,” the “Philippine economy continues to expand strongly in line with potential growth. Real Gross Domestic Product grew by 6.1 percent in 2014, driven by household consumption, private construction, and exports of goods and services.”
In a statement, Philippine Ambassador to the U.S. Jose L. Cuisia, Jr. credited the economic performance of the Philippines “to the good governance model of President Benigno S. Aquino III under the Daang Matuwid or the ‘Straight Path,’ as well as the sound macroeconomic management implemented by Philippine economic managers.”
For the Philippine government to achieve the “growth target of 7-8 percent per annum, (it) will require tackling long-standing barriers to investment and broad-based growth,” the report said.
But it paid tribute to the Aquino government for its “remarkable improvement in the Philippine economy since 2010 (that) reflects prudent macroeconomic policies, as well as the favorable global financial cycle.
INFLATION FELL BELOW BSP’s TARGET
“Inflation fell below the bottom of the Bangko Sentral ng Pilipina’s target band (3±1percent) in June 2015, led by lower fuel and food prices. As the economy is growing broadly at potential, there is no evidence of price or wage pressures, and considerable slack in the labor market remains.
“The current dry weather associated with El Niño conditions has not yet resulted in higher inflation. The external and fiscal positions are strong, with a 2014 current account surplus of 4.4 percent of GDP, gross international reserves of $79.5 billion (or 406.5 percent of short-term debt by residual maturity), a national government fiscal deficit of 0.6 percent of GDP, and general government debt at 36.4 percent of GDP.”
The IMF also noted the general government debt was reduced to US$38B while the external debt was down to US$30B between 2010-2014 in contrast to the general government debt of US$50B from 1990-99 and external debt of US$70B between 1990-99.
The IMF and the World Bank team up with the Philippines to maintain macroeconomic stability, create policy space to meet future potential shocks, and build the foundations for faster and more inclusive growth.
On the other hand, since joining the Manila-based Asian Development Bank (ADB) in 1966, the Philippines has received 223 sovereign loans and grants financed by ADB Special Funds for a total of $14,792.12 million including nonsovereign financing amounting to $887.15 million.
In Dec. 2014, ADB approved a $75M (P3.375B) loan for the expansion and renovation of the Mactan Cebu International Airport terminal, the first large-scale PPP (Public Private Partnership) project awarded under the Aquino government’s PPP program. Another loan was approved for $20M in Jan. 2015 to support the 150-Megawatt Burgos Wind Farm Project in Ilocos Norte.
ADB aims for an Asia and Pacific free from poverty.
Under Article IV of the IMF’s Articles of Agreement, the IMF holds annual bilateral discussions with member governments to assess each country’s economic health and determine any potential financial concerns that are documented in each Country Report and Article IV Consultation.