IMF Executive Board Concludes 2015 Article IV Consultation with Philippines

The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the Philippines on August 26, 2015.
The Philippine economy continues to expand strongly in line with potential growth. Real GDP grew by 6.1 percent in 2014, driven by household consumption, private construction, and exports of goods and services. The external and fiscal positions are strong, with a 2014 current account surplus of 4.4 percent of GDP, gross international reserves of $79.5 billion, a national government fiscal deficit of 0.6 percent of GDP, and general government debt at 36.4 percent of GDP.
The outlook for the Philippine economy remains favorable despite uneven and generally weaker global growth prospects. Real GDP is projected to grow by 6.2 percent in 2015. The current account surplus is expected to rise in 2015 due to lower oil prices and continued inflows from business process outsourcing and remittances. Fiscal policy is expected to remain prudent. Risks to the outlook are tilted to the downside. The Philippine authorities are well equipped to respond as needed with suitable policies should any risks materialize.
Directors welcomed the government’s plan to step up infrastructure investment and social spending, and return to the medium term fiscal deficit target of 2 percent of GDP. They noted that the planned increase in public expenditure in 2015 is appropriate from both cyclical and development perspectives, given the current low inflation, large infrastructure and social needs, and low and declining public debt. Directors also encouraged further efforts to strengthen public financial management and budget execution, and to mobilize revenue to meet the large social and infrastructure needs.
Directors supported the authorities’ medium term priorities that would allow the country to reap the dividends from its young and growing population. These priorities should include raising infrastructure spending, facilitating public private partnerships, improving the business climate, and enhancing human capital and social services for the poor. Directors also welcomed the focus on financial deepening and inclusion as essential elements of the authorities’ inclusive growth strategy. They noted that alternative means of financing and hedging, such as bond and equity markets, could help finance large infrastructure needs. Directors welcomed the recent release of the national strategy for financial inclusion.
Press-release at the official IMF web-site