IMF says revenue reforms, higher spending to support growth

ABS-CBN News

Posted at Oct 11 2010 02:54 PM | Updated as of Oct 11 2010 10:55 PM

MANILA, Philippines - The country should implement revenue reforms, increase social services and infrastructure spending, and improve the business environment to sustain economic growth, an official of the International Monetary Fund (IMF) said.

IMF Asia-Pacific Director Anoop Singh, in a weekend press briefing in Washington D.C., said these are the Philippines' "threefold" priorities to be on track with its economic and fiscal consolidation goals.

"Like other countries in Asia, the Philippines does need social and infrastructure spending, and therefore, the kind of fiscal consolidation that the government has been thinking about over the medium term is more revenue-based fiscal reforms," Singh said.

The Aquino government wants to shore up revenues without necessarily raising or enforcing new taxes. It said it would curb corruption by going after tax evaders and smugglers.

The IMF has raised its 2010 growth forecast for the Philippines to 7% from the earlier 6%, and Singh said this would be supported by the surge in the country's exports, and pick up in investments and private consumption.

"The Philippines is among the countries whose recovery has been very strong. And we do see that in the first half of this year, real GDP growth in the Philippines was close to 8%, and for the year as a whole, it should be close to 7%. This recovery has been stronger than we expected some months ago," Singh said.

The IMF sees the Philippines as the second fastest growing country next to Thailand among the Association of Southeast Asian Nations (ASEAN).

ASEAN economies are expected to grow by 6.6% this year and 5.4% next year from 1.7% last year.