IMF reiterates need for PHL to scale up critical infrastructure build-up
by Bianca Cuaresma - March 1, 2016
The International Monetary Fund (IMF) said while the Philippines has yet to catch up with peers in the region in both quality and quantity of infrastructure, the $285-billion economy should benefit later on from on-going projects and programs meant to bridge the gaping infrastructure gap.
In a paper published on Tuesday, the IMF stressed the need for the Philippines to scale up lacklustre investments for public infrastructures long understood to have hobbled its potential to expand over a long horizon and on sustainable basis.
“This paper studied the macroeconomic implications of ...view middle of the document...
“With a low-capital stock and a fast growing young population, addressing the large infrastructure gap is needed to raise potential growth and reduce poverty and external imbalances,” the IMF said.
“Given the need to ensure debt sustainability amid the large spending needs in other priority spending areas for inclusive growth, continued efforts mobilize revenue will be critical, including by enacting measures to offset any revenue eroding policy changes and, preferably, through a comprehensive tax reform that focuses on broadening the tax base,” it added.
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“The Philippines continues to be one of the strongest and fastest- growing economies in Southeast Asia. With an impressive average GDP growth of 6.3% since the start of the Aquino administration in 2010, the country remains strong in its economic management and is committed to improving its investing climate in order to achieve further progress. Rating agencies such as Moody’s assigned a positive outlook of Baa3 to the country in September 2014 while Standard and Poor’s improved its rating with a stable outlook of BBB in May 2014. Furthermore, Fitch affirmed the country’s long term foreign and local currency issuer default ratings at ‘BBB-‘ and ‘BBB’, respectively, in March 2014” as stated by Mr. Roberto G. Manabat the Chairman and CEO of R.G. Manabat and Co., expresses optimism for the country’s attractiveness towards potential investors. However, the testament of Mr. Manabat seems to be lacking as against the claim of IMF.
According to the International Monetary Fund economist Takuji Komatsuzaki, in a working paper entitled “Improving Public Infrastructure in the Philippines” the country is clearly inferior and has yet to catch up with peers found in the neighbouring jurisdictions in terms of level of public capital and quality of public infrastructure and public investment efficiency. The working paper is a study about the macroeconomic implications of public investment scale up in the Philippines and also involved the use of model simulations to assess the macroeconomic implications of raising public investment and improving public investment efficiency.
Upgrading public investment particularly in infrastructure is a major structural challenge in the Philippines, and due to...