The government may enter into a new two-year program with the International Monetary Fund (IMF) after the current program expires in December this year to assure international investors that the country will continue to exercise prudence in its economic affairs, a ranking government official said over the weekend.
"The successor program is a possibility," the official who requested anonymity said. "We are still studying the merit of another two-year program. But this time, we will not be tying it up with a financing facility."
Most likely, he said, it will be a precautionary program which does not entail the extension of IMF credits but nonetheless will subject the country to the same quantitative performance as the current one know as standby facility.
Under the present program, the government observes economic targets in exchange for a $1.4-billion loan.
Among the performance criteria the country observes are base money, net international reserves, public sector financing requirement, and a ceiling on foreign borrowing approvals. Every quarter, a team from the IMF in Washington assesses the program.
Aside from the performance criteria, the country also submits a package of reform measures that it promises to undertake to sustain economic growth. If the country passes all the performance criteria, then it is allowed to draw from the facility, which in turn is used to boost the country's international reserves.
Asked about the chances of another program, Bangko Sentral ng Pilipinas (BSP) Gov. Rafael B. Buenaventura said the country will undertake another program with the IMF if there is a need for it. An assessment, he said, will be made by the second semester of the year.
"If we really need it, why not? It always helps to have an IMF program in the sense that people think that we will exercise (fiscal and monetary) discipline if we have one," Buenaventura explained.
However, the BSP chief said the current administration, which inherited the current program from the Ramos government in July 1998, wants to run the economy without the presence of the IMF. He said it wants to show to the world that it can keep the economy going and still win the support of international investors and creditors on its own.
"The challenge in the future is how to get the international community to accept our ability to implement our program without the need for an international watchdog," Buenaventura said. -