Only last Thursday, the World Bank revised upward its growth estimates for the country, but forecast slightly slower growth of 4.6 percent.
The IMF issued its latest estimates at the conclusion of a staff mission review done from July 16 to 19 and included meetings with top Filipino economic officials, other senior public officials and representatives of the private sector.
It partly based its forecast on expected surpluses of the current account, balance of payments and inflation from July until the yearend
The IMF mission also keeps close watch over public finance matters of the Department of Budget and Management and other economic agencies.
“The current account and the overall balance of payments are forecast to remain in surplus and inflation is expected to remain well within the target. Public finance continues to improve while the financial system has sustained its resiliency notwithstanding the more challenging external markets,” the IMF mission said in its statement.
Interest rates
In the eyes of the IMF mission, “the Philippines has the policy space to support growth if needed.”
This policy space includes the Bangko Sentral ng Pilipinas’ calibration of interest rates, which BPI Family Bank chief executive officer Jose Limcaoco said on Friday at an investment forum “have more room to fall.”
“The BSP cut special deposit account (SDA) rates by three basis points last week. We think that’s a cue cut—that’s how we call it. We think they’re sending a signal…not because the economy is slow but because they’re just reacting to what the rest of the world is doing,” Limcaoco said.
He posited that the BSP is being “proactive.”
“They cannot fall behind what the other central banks (are doing). The whole world is cutting rates. We cannot be seen as having relatively higher rates than the rest of the world or else we will just have a lot more hot money coming in which will cause problems,” the bank president said.
Limcaoco added that rate cuts loom in the near horizon. “I think the Monetary Board has a big decision to make next week. If they don’t cut next week, I believe they may be cutting in the month to follow. There is room for rates to fall both in government securities (GS) market and even in the lower rates.”
On the public finance dimension, the Aquino administration said it has the “fiscal space” that can allow it to put on hold its plan to source $750 million from external financing sources in the reamining months of 2012.
Finance Secretary Cesar Purisima said on the sidelines of a meeting of the Asia Pacific Economic Cooperation (APEC) that “we are in control of our fiscal destiny” because it can afford to wait to for better conditions in the international financial market, which is beset by worries about Europe’s lingering debt crisis.
The country raised $1.5 billion last January from a global bond issue maturing in 2037.
The Department of Finance had programmed to source $4.02 billion from the international markets. Some $2 .25 billion would be commercial debt while $1.77 billion will be program and project loans. — Earl Victor Rosero, GMA News
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