IMF foresees economic recovery for RP

IMF foresees economic recovery for RP

MANILA (AFP): The International Monetary Fund (IMF) said
Tuesday it expects the Philippine economy to pick up this year
but only if it pushes through with crucial reforms, particularly
on its fiscal sector.

"We share the authorities' view that the recent rebound in
confidence, coupled with peso stability and lower interest rates,
will suport a pickup in economic activity this year," said Markus
Rodlauer, head of an IMF delegation visiting here.

But he warned that this would depend on both external
developments and implementation of government plans, many
requiring the approval of Congress.

"A lot of work lies ahead," particularly in the area of
boosting revenues in order to control the budget deficit and
still having enough money to spend on much-needed infrastructure
projects and education, the IMF official said.

The fund praised the government's plans to overhaul tax
administration and praised the Central Bank of the Philippines
for its exchange rate management, calling it "a pillar of
strength" for the economy.

It cited reforms that the government had to implement as a
priority, including a power sector liberalization that still
remains stalled in Congress, tax legislation which will allow the
development of capital markets and strengthened supervision of
banks.

Rodlauer also called for stronger anti-money laundering
practices and the passage of a new insolvency law.

Manila forfeited the last tranche of a 1.4 million-dollar IMF
loan last year after the government missed its budget deficit
target.

The government has not obtained a new IMF program, but is
voluntarily submitting to scrutiny by the IMF over the next two
years to improve its credit profile.

Economic growth in late-2000 and early-2001 slowed sharply as
the then-president Joseph Estrada become entangled in a massive
corruption scandal.

However investor confidence has improved since Estrada was
toppled in a popular uprising in January which saw Gloria Arroyo,
an economist, installed as president.

Arroyo has imposed a number of austerity measures aimed at
curbing the projected record 225 billion-peso (4.5 billion-
dollar) deficit this year to a more manageable 145 billion pesos.