BSP Governor Rafael B. Buenaventura announced today that the Executive Board of the International Monetary Fund (IMF) approved the fifth review of the Philippines’ Stand-By Arrangement (SBA) in its meeting held on 31 July 2000. Governor Buenaventura issued this statement while in the United States as member of the Philippine team that is accompanying president Joseph Estrada in his official working visit to that country.
Governor Buenaventura said that the IMF’s Executive Board’s approval will enable the country to draw around US$314 million in August 2000. It may be recalled that the Philippines entered into a two-year SBA with the IMF on 1 April 1998. Total financing available under the SBA amounts to SDR1.021 billion (about US$1.383 billion). To date, a total of US$754.56 million had already been drawn against the SBA.
Governor Buenaventura said that the IMF board’s decision is a recognition of the Philippine authorities’ efforts to keep the country’s economic program on track and to move ahead more rapidly with the implementation of structural reforms. In particular, the board noted the continued efforts of Philippine economic authorities in pursuing sound economic policies to ensure the medium-term sustainability of the economic recovery.
The board noted that the country’s macroeconomic performance continues to be generally favorable. Economic growth in the first quarter of 2000 at 3.4 percent was more broad-based, emanating mainly from the manufacturing and services sectors. Inflationary pressures were held at bay, averaging 3.5 percent for the first half of the year, well below the program objective of 5-6 percent for the whole year. The current account remained in surplus at 8.0 percent of GNP for the first quarter of 2000.
On the fiscal front, the board noted the authorities’ efforts to strengthen further revenue generation efforts through more efficient tax administration. These, together with improvements in expenditure control, are expected to help contain the programmed fiscal deficit at P62.5 billion for 2000.
The board also welcomed the authorities’ move to adopt inflation targeting as the framework for monetary policy in 2001. This move reflects the monetary authorities’ efforts to promote the goal of price stability by pursuing forward-looking monetary policy.
Furthermore, the members of the executive board noted that there is a wide-ranging and active structural reform program in the Philippines. Important legislations in key reform areas have been enacted, including the retail trade liberalization law, which provides for the opening up of the retail trade sector to 100 percent ownership by foreigners; the General Banking Law of 2000, which aims to strengthen supervision and regulation of the Philippine Banking System; and the Securities Regulation Code, which aims to make the domestic capital market more competitive and attractive to investors.
The board also recognized the ongoing work being undertaken by Philippine authorities to speed up the passage of remaining key legislative measures during the year, such as the amendments to the New Central Bank Act, which aims to enhance the BSP’s supervisory and enforcement powers and improve further the prudential standards for the banking system; and the Power Reform Bill, which is intended to restructure and modernize the power industry.