IMF review to cover gov’t reconstruction projects in ‘Yolanda’-affected areas

MANILA, Philippines—The government’s ability to execute its reconstruction plan for typhoon-affected areas will be under sharp focus as International Monetary Fund (IMF) representatives start their yearly review on the state of the Philippine economy next month.

Apart from assessing plans on how to revive the areas devastated by Super Typhoon Yolanda, the IMF would also look into how reconstruction projects would stretch the government’s finances.

“There will be focus on Yolanda, not as much on the damage but more from a forward-looking, reconstruction and fiscal policy sense,” IMF resident representative Shanaka Jayaneth Peiris said.

The main issue for the IMF, Peiris said, would be the “execution and plans for the future” following Yolanda, which slammed into the Visayas in November last year. He said this would include the government’s push to “build back better” to make cities like Tacloban less prone to damage dealt by climate change.

Last December, the government announced it would spend P40.9 billion to fund its “Yolanda Rehabilitation and Recovery Plan,” which would focus on the reconstruction of homes and infrastructure, and livelihood projects in affected areas.

Peiris said representatives from the Fund would be in Manila in March to conduct the annual Article IV consultations with various government officials.

Meetings will be set with various economic managers and officials from the Bangko Sentral ng Pilipinas. Article IV consultations are done to allow the IMF to take better stock of the state of the Philippine economy.

From these consultations, the IMF will be able to make accurate forecasts for various indicators such as the country’s external payments position and overall gross domestic product (GDP) growth. The Fund is also expected to make prescriptions that policymakers can opt to follow.

The IMF sees the Philippine economy growing by 6.3 percent this year—a conservative forecast compared to the government’s target of at least 6.5 percent.

The multilateral lender’s projection, however, was made before Yolanda hit the Philippines, driving down the country’s fourth-quarter growth to 6.5 percent after three consecutive quarters of posting 7 percent or more.

It earlier projected that the Philippines’ GDP would grow by 6.75 percent in 2013. The actual expansion was 7.2 percent, making the Philippine economy the best performer among major Southeast Asian markets.

At the end of its article IV consultations last year, the IMF endorsed the local policymakers’ continued focus on further strengthening the government’s fiscal position over the medium term.