IMF Hails Gov't For Steering Resilient Philippine Economy Despite Global Turmoil

Manila: The International Monetary Fund (IMF) has praised the Philippine government for steering a resilient domestic economy despite weak global financial health and predicted a 5 percent growth for the Philippines next year.

Impressed by the "excellent economic stewardship" of the Aquino administration, IMF managing director Christine Lagarde also voiced support for the government's efforts to make fiscal growth inclusive as well as increase revenues through higher sin taxes.

Lagarde is in Manila, which recently transformed from an IMF borrower to lender, as part of her Asian tour. She was, however, unable to meet President Benigno S. Aquino III in Malacañang after the latter cancelled the appointment due to illness. Instead, the visiting IMF leader held talks with Vice President Jejomar Binay, Finance Secretary Cesar Purisima, Budget Secretary Florencio Abad, and other economic managers at the Coconut Palace.

"I congratulated the Filipino authorities for their excellent economic stewardship during difficult times. In the last decade, the Philippines has managed to have an average growth of about 5 percent," Lagarde said in a Palace news conference.

Lagarde said the Philippines is "probably the only country" that IMF raised its growth forecast compared to other countries that suffered lower growth projections.

"I know that the growth in 2012 will be way in excess of 5 percent. And we certainly are looking forward to 2013 being in the range of 5 percent as well," the IMF chief added.

Lagarde attributed the IMF's high growth projections for the Philippine economy to the "excellent policy mix" by the Department of Finance and the Bangko Sentral ng Pilipinas (BSP) and "a combination of sound fiscal policy and sound monetary policy."

She acknowledged that emerging markets in Asia, including the Philippines, have made contributions to uplift the global economy.

Looking ahead, Lagarde recognized the Aquino government's commitment to inclusive economic growth, saying research has demonstrated that this is sustainable.

"It is really to the credit of this government to make sure growth is as inclusive as possible and that inequalities can be reduced," she said, noting that 42 percent of Filipinos are living on less than two dollars a day.

She also commended the government's conditional cash transfer program that can help reduce such inequalities.

The IMF, meantime, is looking forward to continuing its partnership with the Philippines "in a different setting and status," especially since it is now a net creditor to the IMF, according to Lagarde.

She said the Philippines has participated in the bilateral loans this year to contribute to the increased resources of the IMF in dealing with the consequences of the weak global economy.

"The IMF is very, very pleased for the historical partnership that we have but particularly it has now taken the form of a creditor's relationship," she said.

She said the IMF is ready "to do everything we can" and provide technical assistance to the Philippine efforts to expand growth, particularly in Mindanao.

The Philippines has been a constant borrower of the IMF for four decades until the country finally settled its loans in 2006. Last July, Manila lent IMF $1 billion to help stabilize the global economy amid the euro zone's debt crisis.

"Since then, the Philippines is now a creditor, a small creditor of the IMF. But more importantly, a partner in building institutions," Purisima said in the same press briefing.

Purisima said they look forward to working with the IMF, particularly in building institutions in Mindanao following the signing of the Bangsamoro Framework Agreement.

Last month, the IMF hiked its growth projection for the Philippines for this year to 4.8 percent from 4.2 percent in its previous forecast. The IMF also upgraded its GDP projection for next year to 4.8 percent from 4.7 percent.

Lagarde's Manila visit is part of a Southeast Asian tour that includes Malaysia and Cambodia. She was scheduled to attend the Global Dialogue of the Association of Southeast Asian Nations (ASEAN) Summit and the East Asia Summit in Phnom Penh, Cambodia, early next week. However, her trip will be cut short to attend the Eurogroup meeting in Brussels next week amid divisions with European leaders over how Greece can reduce its debts.

Meanwhile, a crucial meeting of Eurozone finance ministers next week will be key to getting Greece ‘'back on its feet,'' Lagarde said as she cut short her visit to Asia to attend the talks.

The IMF managing director told a news conference in Manila that the Eurogroup's focus was getting the debt-wracked country on a ‘'sustainable'' path as soon as possible.

‘'You know, it's not over until the fat lady sings, as the saying goes,'' Lagarde told reporters when asked if she expected a deal to be forged at the meeting next week in Brussels. (With reports from Chino S. Leyco, and AFP)