ADMINISTRATION officials were once again urged to act with urgency in spending the country’s entire budget, to help ensure that the economy stays on its current growth path.
The International Monetary Fund (IMF) commended the government’s medium-term plan for significant yearly increases in spending, noting this would promote development and insulate the country from cyclical economic forces that may lead to a slump.
However, the multilateral lender said the government should prove its ability to consistently stick to what it promised to spend every year.
“[We] encourage further efforts to strengthen public financial management and budget execution, and to mobilize revenue to meet the large social and infrastructure needs,” the IMF said in a report.
The IMF report was released at the completion of the multilateral’s annual Article IV consultation with Philippine officials. All IMF member countries go through Article IV consultations.
The Fund’s prescription for the Philippines comes amid the government’s spotty record in budget execution. In the first quarter of the year, government spending fell far short of the state’s target, dragging economic growth to a three-year low of 5 percent.
Spending picked up in the second quarter of 2015, pulling gross domestic product (GDP) growth up to 5.6 percent. The IMF sees the Philippines growing by 6.2 percent this year and 6.5 percent in 2015.
Other prescriptions in the IMF’s Article IV report include the passage of a proposed law that would give the Bangko Sentral ng Pilipinas (BSP) more powers, particularly the ability to issue its own IOUs and increase its capitalization.
IMF said the outlook for the Philippine economy remains favorable, “despite uneven and generally weaker global growth prospects.”
Lower fuel prices, partly offset by somewhat higher food prices due to assumed moderate El Niño conditions, should help keep inflation in the bottom half of the BSP’s target band.
Likewise, the current account surplus, which accounts for recurring sources of foreign exchange revenue, is expected to rise in 2015 due to lower oil prices and continued inflows from business process outsourcing and remittances.