IMF urges Phl to pursue more structural reforms

MANILA, Philippines - The International Monetary Fund (IMF) is urging the Philippine government to continue its programs on governance, competitiveness and fiscal management to sustain a promising economic future, an IMF official said.

“The Philippines has large favorable factors because it has macroeconomic stability, abundant natural resources, and a large working-age population. However, it needs to improve its governance, competitiveness, and attractiveness to investments,” Anoop Singh, IMF director of the Asia and Pacific Department, said in a forum organized by the IMF, Philippine Institute for Development Studies (PIDS) and Bangko Sentral ng Pilipinas (BSP) entitled “The Quest For Inclusive Economic Growth”.

According to Singh, growth in the Philippines does not show much robustness as compared to other Asian countries.

He, however, is optimistic with the World Economic Outlook’s projected growth of over six percent for the Philippines this year.

“What needs to be done to raise growth is to have more investments and higher productivity, “said Singh.

The country’s weak investment climate, the IMF official said, could be strengthened by improving health and education outcomes and labor market efficiency, and creating strong institutions.

Singh also mentioned that government revenue in the Philippines is low compared to other Asian countries.

“There is a need for higher government revenue to raise public investment,” he said.

He also recommended raising revenue by increasing the country’s tax base.

“Get rid of exemptions that restrict the tax base by increasing and improving tax administration,” he said.

Accentuating the importance of foreign direct investments (FDI) to the economy, Singh said FDI promotes competition which is needed for higher productivity.

He then suggested that the country’s foreign ownership limits should be lessened, and its low ranking on ease of doing business index must be improved.

According to the World Bank, the Philippines is in the 138th place on ease of doing business, clearly lagging far behind Malaysia which is at 12th place.

The IMF director strongly supports the conditional cash transfer (CCT) program or the Pantawid Pamilyang Pilipino Program (4Ps) of the Philippine government.

He said with optimism that it should be continued because CCT programs have significantly helped in decelerating economic inequalities in Latin America.

PIDS president Josef Yap, on the other hand, brought attention to the country`s recent economic performance.