The International Monetary Fund (IMF) provides a positive assessment of the Philippines following the 2019 Article IV Consultation Staff Report. The assessment is based under Article IV of the IMF’s Articles of Agreement where IMF holds bilateral discussions with members, collects economic and financial information, and discusses with officials the country’s economic development and policies.
“I believe that the IMF’s assessment of the domestic economy reflects multi-sectoral efforts to foster inclusive economic growth. In line with this, the BSP will continue promoting price stability, financial stability, and an efficient payment and settlement system while pursuing legislative initiatives that will enhance our capacity to pursue our mandates,” said BSP Governor Benjamin E. Diokno.
Key Findings of the IMF’s Staff Report
The report finds that despite the slowdown in the first half of 2019 due to temporary government underspending and external trade uncertainty, the Philippine economy continues to perform well, having regained momentum in the second half of the year.
The report noted that inflation continued to decline to settle at 2.5 percent in December 2019. Bank lending growth slowed down but stabilized at 10.5 percent in September 2019 or as of the end of the IMF mission. Meanwhile, Gross international reserves reached US$88 billion as of end-2019, which is 200 percent of the IMF’s reserve adequacy metric. The 2019 external position is in line with medium-term fundamentals and desirable policy settings.
Overall, the IMF outlook on the country is positive. According to the report, “The Philippine economy continues to be a strong performer despite recent headwinds.”
IMF Recommendations Supportive of BSP Legislative and Reform Agenda
The report cites that the Philippines has policy space to adopt a more expansionary macroeconomic policy, with priority to public capital and social spending programs.
The IMF also recommends enhanced public investment management through promotion of greater competition and public access to information in the procurement process. These measures will contribute to the timely and cost-effective implementation of the government’s massive “Build, Build, Build” program.
Supportive of the BSP’s structural reform agenda, the IMF endorses bolder implementation efforts particularly on the further lifting of restrictions on foreign direct investments, broadening of scope of poverty reduction efforts, mobilization of resources for climate change adaptation and mitigation, robust implementation of the AML/CFT regime, and easing of the stringent bank secrecy law.
These IMF recommendations are in line with the BSP’s legislative and reform agenda. In fact, the BSP, Congress, and other key government agencies are working together for the immediate passage of the following measures: amendments to the Anti-Money Laundering Act of 2001 (AMLA) and the Human Security Act of 2007 (HSA), amendments to the Agri-Agra laws, and reforms in financial consumer protection and deposit secrecy.