BSP and IMF agree that elections outcome won’t alter policy reforms

The outcome of the Philippines' presidential elections in May won't alter the policy reforms that have spurred economic growth, top officials of the Bangko Sentral ng Pilipinas (BSP) and the International Monetary Fund (IMF) said yesterday.

Speaking at a business forum, BSP Gov. Amando Tetangco Jr. said that as far as economic policies are concerned, "it is going to be business as usual... Most of the reforms that are in place now have been institutionalized, either as part of the nation's laws or as part of regulations."

The latest polls indicate the presidential election scheduled for May 9 will be a close race between Senator Grace Poe, Vice President Jejomar Binay, Davao City Mayor Rodrigo Duterte and former Interior Secretary Manuel Roxas II, who has been endorsed by President Benigno Aquino III.

Shanaka Peiris, the IMF's representative in the Philippines, said the candidates' rhetoric doesn't suggest a departure from the current economic policies.

"From the general impression that we get, the main candidates are generally all saying roughly the same things: They all see the importance of economic growth, job creation and inclusive growth," he said.

The IMF last week cut its growth forecast for the Philippines to 6.0% this year and 6.2% in 2017. In January, the fund projected Philippine economic growth of 6.2% for 2016 and 6.5% for next year.

The BSP expects the economy to remain resilient this year to both external and domestic risks, but is ready to act if needed to deal with risks, its governor said yesterday.

"We have the policy space to respond to uncertainties in the external and domestic environment," BSP Governor Amando Tetangco said in a speech at the Manila Times 3rd Business Forum.

"We will therefore make adjustments to the stance of policy as conditions warrant."

He said low oil prices, El Nino and infrastructure gaps are among the key domestic risks for one of Asia's fastgrowing economies.

While low oil prices help keep inflation manageable, Tetangco said the uneven global growth prospects and uncertainty in oil price movements have triggered global portfolio realignment, with emerging markets hit by strong fund outflows last year.

The BSP kept its benchmark interest rate steady at 4.0 percent at its last policy review on Feb. 11, where the rate has been since September 2014, while warning of a drag from the El Niño dry weather and financial market volatility ahead.

Tetangco reiterated that the economy does not need additional stimulus at the moment. It could grow 6 percent this year and 6.2 percent next year, based on International Monetary Fund forecasts.

The external liquidity position continues to be robust, with the balance of payments expected to revert to a surplus later this year from a deficit of $813 million in January, he said.

The central bank is keeping its policy of allowing the exchange rate to be determined by market forces, but will act to limit excessive exchange rate movements, he said.

As financial markets are carefully watching China's next monetary policy moves, Tetangco reiterated the need for "cohesive" actions from Chinese authorities.

"I think what we need is greater clarity, greater communication of monetary policy," he added. (Dow Jones and Reuters)