IMF sees RP economy growing six percent in 2007, 2008

MANILA (AFP) - The Philippines will likely post nearly six percent economic growth in 2007 and 2008, International Monetary Fund managing director Rodrigo Rato said here Tuesday.

"We expect the Philippines to grow at rates close to six percent in 2007 and 2008," he said as he lauded President Gloria Arroyo's government for its economic reforms.

These projections are below the government's of 6.1-6.7 percent for 2007 and 6.1-6.8 percent for 2008 after the economy grew 5.4 percent in 2006.

Rato, who earlier met with Arroyo and other officials as part of a Southeast Asian tour, said "monetary policy has been very successful," citing efforts to strengthen Philippine banks' balance sheets.

He also praised the government's efforts to spend more funds on improving the country's crumbling infrastructure.

However he and other IMF officials also warned that the Philippines had to act on improving its fiscal position following the announcement that the budget deficit was again rising beyond the 63 billion pesos (1.39 billion dollars) target set by government.

Government economic planners have said that they can bridge the budget shortfall by privatising state assets this year.

"I believe the government and the president are fully aware of the need to raise tax efficiency," Rato said.

He cautioned too that privatisation "does not produce sustainable revenues," and that its real value was in increasing market efficiency.

IMF Asia-Pacific director David Burton said the "authorities are taking steps to improve revenues."

Burton remarked that the fiscal situation had already starkly improved from three or four years ago, saying the difference was like "night and day."