Manila's 'significant' gains vs poverty must translate to inclusive growth: IMF

Cathy Yang, ABS-CBN News

Posted at Jan 17 2020 03:26 PM

Twin boys eat their ice cream as they play outside a mosque at Quiapo in Manila, Philippines, Jan. 10, 2020. Willy Kurniawan, Reuters

MANILA -- The Philippines needs to translate "significant progress" in reducing poverty numbers to inclusive growth to make its economic expansion sustainable and avoid social unrest that gripped developed economies, the International Monetary Fund said Friday.

Manila must ensure that poverty alleviation efforts are "targeted" rather than just depending on the effects of social programs to "naturally go down," said Changyong Rhee, director of the IMF's Asia and Pacific Department.

The IMF forecasts the Philippine economy to grow 6.3 percent in 2020, aided by the recovery in government spending and low interest rates, Rhee said in an exclusive interview with ANC's The Boss.

"Government has to be mindful how to share the fruits of the high growth rate," Rhee said, adding that despite the reduction in the absolute number of poor Filipinos, poverty and inequality remained "quite high."

Poverty incidence among individuals fell to 16.6 percent in 2018 from 23.3 percent in 2015. This means 166 out of every 1,000 Filipinos belong to poor families whose incomes are not enough for basic needs, official data showed.


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Efforts to institute a national ID will help the Philippines hasten poverty reduction by helping max tax collection and the distribution of social services more efficient, he said.

Rhee likened the current role of the IMF in Asia as having shifted to a family doctor from an emergency doctor during crisis years. He stressed the importance of multilateralism in the face of rising populism in the US and Europe.


Washington-based IMF forecasts 6.3-percent gross domestic product growth for the Philippines this year. President Rodrigo Duterte's economic managers set a 6.5 to 7.5 percent this year after regaining momentum in the third quarter of 2019.

The IMF's projection is higher than those from the Asian Development Bank, S&P, Fitch Solutions and the ASEAN Plus 3 Macro Research Office.

"The Philippines has been one of the every good performers in terms of growth" notwithstanding the global slowdown, Rhee said.

"We certainly hope the reform momentum continues," he said.

The 11-member ASEAN bloc accounts for 10 percent of the global growth rate, comparable to 11 percent from the US and 12 percent from the Eurozone, he said. China accounts for 35 percent while India contributes 35 percent, he said.

Rhee urged Philippine regulators to ensure that credit growth is powering "good investments" rather than just real estate, in which case, loan expansion becomes a "big problem," he said.

"We believe, given the recent reforms and the current environment... the central bank has policy space if necessary to react at this moment. The current situation of the Philippines is very sound," he said.

Bangko Sentral Governor Benjamin Diokno had signaled a 50-basis point cut in the benchmark lending rate this year, after a cumulative 75-point reduction in 2019 that brought it down to 4 percent.