IMF hopes for stronger ties with Philippines
MANILA, Philippines - Amid mounting pressure to resolve the debt crisis in Europe, the International Monetary Fund (IMF) is looking forward to strengthening its partnership with the Philippines, which has now taken a greater role as creditor to the fund.
Speaking in Malacañang on Friday, November 16, IMF Chief Christine Lagarde acknowledged that the fund's relationship with the Philippines has changed after the country turned “net creditor” from borrower, lending $1 billion to the fund early this year.
“Now the Philippines is a net creditor to the IMF and has actually participated in the bilateral loans that have been put in place this year in order to contribute to the increased resources of the IMF,” she said.
Finance Secretary Cesar Purisima welcomed Lagarde’s statements, saying the Philippines has always been a ready partner.
“The Philippines and the IMF have been long time partners in development. Over the 44 years before 2006 the Philippines was a major customer of IMF. But since then the Philippines is a small creditor, but more importantly a partner in building institutions.”
Lagarde said contribution from the Philippines will greatly help in efforts “to deal with the consequences of the financial crisis including for the crisis bystanders.”
The debt crisis has taken a heavy toll on the 17-nation eurozone, now in recession for the second time in 3 years. The eurozone economy shrank 0.1% in the third quarter, compared with the 3 months before, when it contracted 0.2%, meeting the technical definition of a recession as two consecutive quarters of decline.
The contraction has raised renewed concerns over the possible negative effect on the global economy. Europe is a major trading partner of countries in Asia, including the Philippines.
While Lagarde said the eurozone recession was not a surprise, she is positive the European economy will bounce back in 2013. “We had forecasted there would be a recession in the Eurozone in 2012 and that growth would pick up in 2013.”
Lagarde’s visit to the Philippines is her first as head of the IMF. It is a stop in her Southeast Asia tour, which also includes trips to Malaysia and Cambodia.
As well as showing appreciation for Asian countries’ contribution to the fund this year, her trip aims to build frayed ties with the countries following unpopular fiscal policies implemented by the IMF during the 1997 Asian financial crisis. At that time, the IMF pushed Asian countries to implement austerity and other measures to cut debts.
When questioned about why the IMF seems to have softened its policy prescriptions for the euro crisis in comparison to the strict austerity measures recommended during the Asian crisis, Lagarde said: “this is a matter which we are reviewing currently. It’s an important one because we have seen capital flows in and out of countries and significant consequences as a result.”
“Our position is very much based on the attest development we are developing at the moment and will be settled vey shortly probably with the view to being more flexible than we have been historically.”
PH’s ’excellent stewardship’
Lagarde, meanwhile, congratulated Philippine officials for “their excellent economic stewardship during difficult times.”
“This year 2012 is a very difficult time because of the financial crisis in other parts of the world. The Philippines is the only country of which we have increased the growth forecast as opposed to other places in the world where we have decreased the forecast,” she said.
In IMF’s World Economic Outlook, it upgraded its 2012 economic growth rate projection for the Philippines to 4.8% from 4.2% in April. Next year’s forecast was also upgraded to 4.8% from 4.7%.
Lagarde, however, is more bullish about the Philippine economy than the IMF report. She said that local gross domestic product growth in 2012 will be “way in excess of 5%” and a similar range is expected for 2013.
She attributed this to a mix of sound fiscal and monetary policies.
Lagarde said the Philippines and ohter emerging markets in Asia will play an important role in fostering global growth.
“When you look at their contribution to global growth its very significant particularly in the touch years that we have gone through. Global growth was essentially driven out of his part of the world and out of emerging market economics,” she concluded. - Rappler.com