Philippine reforms move ahead.
by MEDIA CONTACT RESOURCES, INC.
Between June 9, 2005 and June 22, 2005, staff members of the
International Monetary Fund (IMF) visited the Philippines to assess the
country's economic prospects. On June 23, 2005, the IMF issues a
preliminary summary of its findings. Several news organizations carried
excerpts and commentaries from the report. What follows is based chiefly
on information from the Philippine Times Website.
Key finding: GDP is likely to grow 4.75 percent in 2005. But, the
IMF warned, political uncertainty could make this goal difficult to
reach. The IMF specified the political uncertainty as a loss of
confidence in the Philippine economy by foreign investors and a
concurrent loss of confidence in the country's currency.
The drop in confidence, according to the IMF, is in turn caused by
efforts among political opponents of the country's president. These
opponents have attempted to have the president removed from office, and
have raised questions about the president's family and their
connection to illegal gambling.
On a positive note, the IMF cited progress in some critical
reforms. Tax reform was specifically mentioned as representing a major
step forward. In general, revenue collections have improved. The
government also increased taxes on alcohol and tobacco. And a tariff on
power was imposed.
What this means, says the IMF, is that foreign investors will see
that the Philippines is making serious moves to improve fiscal
management, which in turn means government spending will align better
with government revenue releasing some pressure on inflation.
In separate disclosures, the IMF forecasted the rate of inflation
for 2005 as increasing 6.8 percent. The average annual increase in the
rate of inflation for the Philippines (including the 2005 forecast) is 6
percent. Per capita income for Filipinos increased at an average pace of
just over 3 percent annually for the same period. Lack of good
governance is usually blamed for poor performing per capita income
compared with GDP markers.
Philippine consumers, therefore, have a great deal to gain from
reforms that work to put additional money into their pockets.
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