News Brief No. 99/7

News Brief: IMF Completes Review and Approves US$129 Million Credit Tranche for the Philippines

February 24, 1999

Alassane D. Ouattara, Deputy Managing Director of the International Monetary Fund (IMF), said today: " I am pleased to announce that the IMF’s Executive Board today approved the completion of the third review under the stand-by credit¹ and the release of SDR 95.01 million (about US$129 million) credit tranche for the Philippines. I commend the authorities for continued satisfactory progress in implementing the program under difficult circumstances. This has contributed to the resiliency of the Philippine economy through the recent crisis. Even so, economic activity has slowed markedly, and the outlook for 1999 is uncertain. In response, the program has been strengthened at this review to support growth while continuing to aim at improving the external position. The authorities are taking several steps to deal with the economic slowdown. Fiscal policy is being geared to support domestic demand, and monetary policy has been cautiously eased within the overarching goal of controlling inflation and stabilizing the peso. The external situation remains vulnerable, although it has strengthened in recent months reflecting continued export growth and a return of capital inflows."

Ouattara said that the Philippines has taken several positive steps in restructuring the banking sector: "It is important to continue the banking reforms adopted under the program, in order to ensure that the sector remains in good health. Improving tax administration is another core element of the program where progress has been made, and needs to be sustained to safeguard medium-term fiscal sustainability. I am pleasedthat the structural reform agenda has been broadened to include corporate sector and other public sector reforms. Implementation of these reforms will provide a strong foundation for an early return to rapid economic growth."