IMF lauds PBBM admin’s swift policy actions through the MTFF in response to global economic and geopolitical challenges

The International Monetary Fund (IMF) has lauded the Marcos, Jr. administration’s swift policy actions through the Medium-Term Fiscal Framework (MTFF) in response to the challenges arising from the global shocks including the ongoing geopolitical tensions.

This recognition was highlighted by the IMF in its Staff Report on the recently concluded Article IV Mission to the Philippines, which was conducted from September 21 to October 3, 2023.

The IMF team, led by Mission Chief Shanaka Jayanath Peiris, outlined in its report a comprehensive analysis of the economic and financial health of the Philippines.

According to the report, the Philippine government was able to swiftly carry out policy actions in response to the disrupted global markets that resulted in supply chain bottlenecks and elevated inflation rates around the world.

The IMF particularly lauded the Marcos, Jr. administration’s contractionary monetary policy characterized by decisive interest rate hikes to curb inflation, supported by a fiscal consolidation plan through the MTFF.

The MTFF aims to bring down the country’s debt-to-GDP ratio to less than 60 percent by 2025 and cut the deficit-to-GDP ratio to 3.0 percent by 2028.

The IMF is confident that the Philippines will be able to achieve its deficit-to-GDP ratio target for 2023 of 6.1 percent, even projecting that the deficit will fall below the ceiling despite increased public spending in the second half of 2023.

Moreover, the IMF sees that the country’s fiscal path is closely on track to achieving the targets outlined in the MTFF.

For 2024, it anticipates a deficit-to-GDP ratio close to the MTFF target of 5.1 percent, as the IMF projects higher non-tax revenues.

The IMF also recognized the MTFF’s dual function: first, it complements the contractionary monetary policy; and second, it widens the flexibility of fiscal policy in addressing future adverse shocks.

The IMF projects the Philippine economy to grow at 6.0 to 6.5 percent over the medium term due to the implementation of structural reforms, such as the Public-Private Partnership (PPP) Code; the Regional Comprehensive Economic Partnership Agreement (RCEP); and amendments to the Retail Trade Liberalization