IMF post-program monitoring of RP to continue for another year

Despite calls for the termination of its close monitoring, the International Monetary Fund (IMF) will continue its post-program monitoring of the Philippines for another year.

The post-program monitoring (PPM) is an annual examination of the country’s macro-economic targets and policy undertaking, conducted over and above the regular Article IV review applicable to all members of the IMF.

According to IMF resident representative Vikram Haksar, the PPM will continue, putting the Philippines under IMF review twice a year instead of just once.

The PPM has been under attack, particularly from Congress which said the IMF need not monitor the Philippines so closely since it no longer has an active IMF loan.

According to Haksar, however, the PPM was supported by Philippine authorities themselves who have said the IMF’s persistently close monitoring was "useful."

"Right now, the authorities have indicated that it is useful to have these more enhanced policy discussions," Haksar said. "The PPM is purely a surveillance meeting anyway. It is not attached to any loan. It’s just a more enhanced monitoring."

According to Haksar, the PPM has been extended for another year "in principle" although the agreement on whether to continue the PPM was largely an "understanding" more than an actual agreement.

Haksar explained that as a general rule, the PPM ends when our borrowing is less than 100 percent of quota contribution to the IMF.

The Philippines, although no longer a net borrower, pays roughly 50 to 60 percent of its quota contribution to the IMF, itself a point of contention between the National Government and the Bangko Sentral ng Pilipinas (BSP) which advances the payment on behalf of the National Government.

According to the BSP, on the other hand, the government had no problems continuing the PPM, saying that the IMF’s seal of good housekeeping was necessary to keep credit rating agencies calm.

"The PPM is not a policy-dictating monitoring so I don’t get what the big deal is," Buenaventura said. "All the IMF does is to validate and comment on our programs."

"When they make useful recommendations, we do it. When their recommendations are not appropriate, we don’t do it," Buenaventura said. "It’s that simple."

Buenaventura said the IMF’s continued close monitoring assures credit rating agencies and investors since the IMF serves as a third party examiner.

Buenaventura said that when the National Government cleaned up its debt portfolio and restated the national debt by almost P1 trillion, the IMF’s participation in the exercise reinforced its credibility.

"If we had done that without the IMF, it would have looked suspicious because we were doing it at a time when everyone is edgy about our debt level," he pointed out.

Buenaventura said the IMF made the same contribution in 2003 when the government had to restate its current accounts due to misclassifications in the country’s trade figures.