RP mulls new IMF program

The Philippines has opted for an "open-ended" post monitoring program with the International Monetary Fund (IMF) to make it easier for the country to enter into a new program with access to funding if the economic situation worsens next year.

According to IMF chief of mission Markus Rodlauer, there has been no agreement on the length of the post monitoring program the Philippines is set to enter with the IMF starting next year.

"All that has been agreed so far, is for a review to be conducted either late March or April," Rodlauer said.He said there is no funding involved under the post monitoring program with the IMF.

But because the main problem of the Philippines remains its fiscal sector, the need to secure financing will be a crucial factor.

The Philippines’ fiscal problem had been cited by the IMF following its review of the economy this year.

The IMF warned that if the fiscal problem is not resolved, it could have a negative impact on interest rates and inflation.

The IMF has urged the government to undertake fiscal consolidation by ensuring the gradual reduction of its budgetary deficit, otherwise the government will be forced to borrow either domestically or internationally.

Rodlauer also said the government must review its policy on tax administration and on the grant of tax incentives.

"The government tax incentives are granted to the most dynamic sector such as exports and electronics which could be the best sources of revenue," Rodlauer said. – Marianne Go