IMF to assume new role as RP’s adviser

With the end of its post-program monitoring (PPM) on the Philippines, the International Monetary Fund (IMF) said its new role would be limited to that of a confidential third-party adviser on economic and monetary matters.

The IMF wrapped up the last of its PPM missions last week, marking the first time that the Philippines would be out of intense IMF scrutiny since the Asian crisis.

According to IMF senior adviser James Gordon who headed the PPM mission, the end of the IMF program and the PPM would reduce the Fund’s monitoring to the annual surveillance that all IMF member countries normally go through.

"The PPM is a more intensive surveillance while the annual surveillance is something that we do for every member of the Fund," Gordon said.

Looking forward, Gordon said the IMF’s new role in the Philippines would be somewhat limited but probably more relevant to the emerging stage in the country’s development.

"What we need to do is try and establish ourselves as a confidential external advisor," Gordon said. "The Fund can bring cross country experience that we have, to bear on policies that are developing in response to the changing economy."

IMF resident Reza Baqir said the end of the PPM was actually a welcome development for the IMF.

"It’s a welcome sign of the Philippines’ external viability," Baqir said. "It’s something that the IMF looks forward to because it means the country is doing well in all the key areas of concern."

The PPM involves more frequent consultation between the IMF and the government whose arrangement had expired but continued to have IMF credit outstanding. These discussions focus on policies that have bearing on external viability.

Following the end of the stand-by arrangement with the IMF in December 2000, the Philippines entered into the PPM where the IMF conducted periodic review of economic developments and assessment of economic policies.

The PPM is supposed to last until the country’s outstanding obligations go down below 100 percent of the membership quota that all IMF member countries are required to pay.

Although the country’s obligations have fallen below the quota, the government has decided to stay under the PPM process to assure its creditors that it is being closely monitored by a credible third party.