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THE
International Monetary Fund believes the Philippines is
capable of accelerating growth this year to as high as 7
percent in the medium term. “Growth is expected to
increase to 5.8 percent in 2007 but could go higher over
the medium term on the back of additional reforms that
put public debt on a more sustainable downward path and
boost investor confidence and investment.”
Fund
resident representative Reza Baqir said at a press
briefing Thursday that last year’s 5.4 percent growth
was proof of the potential in the face of the widely
expected 5 percent.
The Fund
is, however, not enchanted with the Bangko Sentral ng
Pilipinas’ resort to a tiered interest rate scheme in an
effort to spur bank lending, which had been anemic since
1997. “Many [Fund] directors cautioned that while
tiering was reintroduced as a targeted and temporary
approach to credit growth, its reintroduction created
uncertainties about the monetary policy stance and
corresponded to a significant effective easing that
could render the inflation outlook less favorable.”
Bangko
Sentral Governor Amando Tetangco Jr. disputes this view,
saying the additional resulting liquidity last year was
quickly absorbed as indicated by the actual growth of
5.4 percent. |
