Asian crisis spoils RP's exit from IMF tutelage

Asian crisis spoils RP's exit from IMF tutelage

MANILA (AFP): The Philippines completed its final
International Monetary Fund (IMF) program on Friday, but quickly
entered into a "precautionary arrangement" because of the Asian
financial crisis, officials said Saturday.

Completion of the program called the Extended Fund Facility,
which started in 1994, technically marks the Philippines' exit
from 36 years of IMF supervision.

With the successful review, the Philippines will draw the
final tranche of the program totaling US$331.4 million plus a
parallel financing from the Japan Export-Import Bank to boost
international reserves, a presidential palace statement said.

It said the IMF board meeting in Washington on Friday
"approved the completion of the final review of the program"
which officials have said will be the last under the IMF.

Completion of the program came after the Philippines met all
the IMF requirements for a successful review such as the passage
by Congress of a sweeping tax reform law and the deregulation of
the oil industry.

The Philippines was supposed to bow out of the current program
in June 1997 but delay in the passage of the two vital laws
forced Manila to defer it.

"This is what we've been waiting for and what we've been
working for during the last three years," Central Bank of the
Philippines governor Gabriel Singson told reporters.

"This will give the international community more confidence on
the Philippines."

However, news of the review completion was tempered by
Manila's move to enter into a precautionary arrangement for a
standby facility with the IMF effective April 1. The IMF also
approved the new program on Friday.

The palace statement and Singson avoided using the word
"exit", choosing instead to stick to the phrase "completion of
the final review of the program. "

The new two-year precautionary program will allow the country
access to a 1.371 billion-dollar standby fund from the IMF in
case of an emergency, the statement said.

Manila will tap the standby facility "only when it is
necessary and that depends on us," Singson said.

The program however will bind the country to fiscal and
monetary targets set by the IMF, officials admitted.

Singson said he will travel to Washington on May 8 "to discuss
with the IMF some details of the program" and an IMF team will
arrive in Manila later that month to conduct the first review
under the new program.

He said the next government taking over after presidential
elections in May can review the terms.

Under the precautionary program, the Philippines committed to
the IMF a gross national product (GNP) growth target of three
percent this year, 4 to 5 percent in 1999 and 6 percent in 2000.

Average inflation rate was set at 7.5 percent in 1998, 8.5
percent in 1999, six to seven percent in 2000 and five percent
after that. It also pledged to reduce external current account
deficit to 3.1 percent of GNP and increase international reserves
to around two months of imports.

The new program aims to "restore confidence in the peso and
contain the impact of the Asian crisis on the economy," the
statement said.

The Philippines entered its first program in April 1962 and
had 22 programs since then.