{ "title": "IMF Executive Board Concludes 2024 Article IV Consultation with the Philippines", "publication": "IMF News, December 20, 2024", "sourceUrl": "https://www.imf.org/en/news/articles/2024/12/17/pr-24478-philippines-imf-concludes-2024-article-iv-consultation", "canonical": "https://www.imf.org/en/news/articles/2024/12/17/pr-24478-philippines-imf-concludes-2024-article-iv-consultation", "overlayPath": "/en/news/articles/2024/12/17/pr-24478-philippines-imf-concludes-2024-article-iv-consultation/index.md", "summary": "On December 4, 2024, the Executive Board of the International Monetary Fund (IMF) concluded the 2024 Article IV consultation with the Philippines.", "publishDate": "2024-12-20", "sections": [ { "heading": "Overview", "content": "- On December 4, 2024, the Executive Board of the International Monetary Fund (IMF) concluded the 2024 Article IV consultation with the Philippines.\n- Press Release No. 24/478.\n- Date of press release listed: December 19, 2024." }, { "heading": "Recent economic performance", "content": "- 2022: strong post-pandemic rebound.\n- 2023: Growth moderated, growing by 5.5 percent.\n- First three quarters of 2024: Growth recovered to 5.8 percent, driven by strong public consumption and public construction; partially offset by El Nino and subdued private consumption.\n- Inflation (year-on-year) in October 2024:\n - Headline inflation: 2.3 percent.\n - Core inflation: 2.4 percent.\n- Current account deficit:\n - 2023: narrowed to 2.7 percent of GDP from 4.5 percent.\n - Narrowing expected further in 2024 amid lower commodity prices, gradual pick-up in tourism and business process outsourcing receipts.\n- Banking system: has weathered the high interest environment with sufficient liquidity and capital buffers." }, { "heading": "Staff projections (2024–25 and medium term)", "content": "- Growth:\n - Expected to reach 5.8 percent in 2024.\n - Expected to pick up to 6.1 percent in 2025.\n - Potential output estimated between 6.0 to 6.3 percent over the medium term.\n- Inflation:\n - Projected to decline to 3.2 percent on average in 2024 from 6.0 percent in 2023, supported by the reduction in rice tariffs and other non‑monetary measures to reduce food prices.\n- Current account deficit:\n - Expected to narrow to 2.0 percent in 2024 and 1.9 percent in 2025.\n- Risks to near-term growth outlook are tilted to the downside, including:\n - recurrent commodity price volatility,\n - new supply shocks,\n - escalation of geopolitical tensions,\n - monetary policy stance in advanced economies turning out to be too tight for longer,\n - growth slowdown in major economies,\n - major natural disasters or extreme climate events,\n - stalled reform momentum or lower than expected payoffs from reforms." }, { "heading": "Executive Board Assessment — key messages endorsed", "content": "- General appraisal:\n - Authorities handled multiple external headwinds well with wide-ranging plans for high and inclusive growth.\n - Growth resilient despite external shocks and unprecedented tightening in global monetary conditions.\n - Authorities promptly adjusted the policy rate after the sharp increase in inflation in 2022 and initiated gradual fiscal consolidation.\n - Several key reforms introduced to spur investment and promote exports.\n- Growth and inflation outlook:\n - Growth expected to pick up modestly in 2024-25 while inflation should remain within the Bangko Sentral ng Pilipinas (BSP)’s target range.\n - Growth supported by acceleration in consumption as food prices ease and by increased investment from public investment and more accommodative financial conditions.\n - 2023 external sector position assessed to be broadly in line with fundamentals and desirable policies.\n - Risks to near-term growth tilted to the downside; new supply shocks and recurring commodity price volatility represent upside inflation risks.\n- Monetary policy guidance:\n - BSP has room to ease the policy rate gradually towards a neutral stance.\n - Continued gradual reduction in the policy rate is appropriate given inflation and inflation expectations returning to target and a negative output gap.\n - A data‑dependent approach and careful communication are important amid uncertainty and frequent supply-side shocks.\n - Exchange rate should continue to act as a shock absorber; FXI may be appropriate under certain circumstances.\n - Establishing a credible yield curve is important to develop the fixed-income market and improve monetary policy transmission.\n- Financial stability and macroprudential policy:\n - Systemic risks are moderate but pockets of vulnerabilities remain.\n - Banking system has sufficient liquidity and capital buffers; non-performing loans are low.\n - Commercial real estate: persistently high vacancies and falling rents in parts of the sector; non-performing housing loans remain elevated.\n - Rapid growth in consumer loans warrants close monitoring.\n - BSP should be ready to adjust macroprudential policy in line with the financial cycle and move toward a positive neutral level for the countercyclical capital buffer.\n - Strengthen capacity to assess financial stability risks and resolve troubled financial institutions.\n- AML/CFT:\n - Significant progress made on anti-money laundering and combating the financing of terrorism (AML/CFT).\n - FATF’s initial determination that the Philippines has substantially completed its action plan is welcome.\n - Continued adaptation to evolving FATF requirements important ahead of the next mutual evaluation in 2027.\n - Reforming the bank secrecy law will strengthen AML/CFT effectiveness and enhance BSP supervisory powers.\n- Fiscal policy and public finances:\n - More gradual pace of consolidation in the revised fiscal program is appropriate alongside a concrete and sustainable plan to raise tax revenues and implement expenditure reforms.\n - 2025 budget proposes a broadly neutral fiscal stance to help mitigate downside risks to growth.\n - Additional tax measures should be considered to create more space for priority spending.\n - Tax reform priorities could include previously planned excise tax measures, enhancing value-added tax efficiency, improving tax administration, and ensuring effective control of tax incentives.\n - Efforts should focus on reforming the military and uniformed personnel pension system, improving expenditure efficiency, and effectively managing fiscal risks.\n- Structural reforms and medium-term potential:\n - Philippines has significant potential from abundant natural resources, untapped blue economy, and a sizable demographic dividend.\n - Unlocking medium-term growth depends on comprehensive and well-sequenced structural reforms coupled with strengthened social protection.\n - Reforms should aim to boost job creation, enhance productivity, increase climate resilience, and reduce poverty and inequality.\n - Priority areas: upgrading infrastructure; significant investments in healthcare and education; addressing land fragmentation and low productivity in agriculture; enhancing governance.\n - Digitalization highlighted as an opportunity to improve access to quality education, promote financial inclusion, and enhance public spending efficiency." }, { "heading": "Table 1 — Selected economic indicators, 2021–2026 (highlights)", "content": "- Demographic:\n - Population (2023): 111.9 million.\n - Life expectancy at birth (2022): 72.2.\n- Poverty:\n - Below $2.15 a day (2021): 3.\n - Below the national poverty line (2023): 15.5.\n- Inequality (2021, income shares):\n - Top 10 percent: 32.5.\n - Bottom 20 percent: 6.5.\n- IMF quota: SDR 2,042.9 million.\n- Main export products: electronics, mineral, agro-based products, equipments, and chemicals.\n\nSelected macro series (annual unless noted)\n- Real GDP (percent): 2021: 5.7; 2022: 7.6; 2023: 5.5; 2024 Est.: 5.8; 2025 Proj.: 6.1; 2026 Proj.: 6.3.\n- Consumption (percent): 2021: 4.7; 2022: 7.7; 2023: 5.4; 2024 Est.: 6.0.\n - Private consumption: 2021: 4.2; 2022: 8.3; 2023: 5.6; 2024 Est.: 5.2; 2025 Proj.: 6.5.\n - Public consumption: 2021: 7.2; 2022: 5.1; 2023: 0.6; 2024 Est.: 6.4; 2025 Proj.: 3.0; 2026 Proj.: 3.3.\n- Gross fixed capital formation (percent): 2021: 9.8; 2022: 8.2; 2023: 8.6; 2024 Est.: 8.9.\n- Net exports (contribution to growth): 2021: -2.3; 2022: -2.2; 2023: 0.0; 2024 Est.: -1.0; 2025 Proj.: -1.1.\n- Real GDP per capita (percent): 2021: 4.9; 2022: 6.7; 2023: 4.6; 2024 Est.: 5.0; 2025 Proj.: (not listed).\n- Output gap (percent, +=above potential): 2021: -3.5; 2022: 0.4; 2023: 0.2; 2024 Est.: -0.2; 2025 Proj.: -0.1.\n- Unemployment rate (percent of labor force): 2021: 7.8; 2022: 4.4; 2023: 4.0; 2024 Est.: 4.5.\n- Underemployment rate (percent of employed persons): 2021: 15.9; 2022: 14.2; 2023: 12.3.\n- Claims on private sector (in percent of GDP): 2021: 49.9; 2022: 48.9; 2023: 48.3; 2024 Est.: 49.3; 2025 Proj.: 50.8; 2026 Proj.: 52.2.\n- Claims on private sector (yoy growth rate): 2021: 3.8; 2022: 11.1; 2023: 9.1; 2024 Est.: 11.0; 2025 Proj.: 11.9.\n- National government overall balance (percent of GDP, IMF definition): 2021: -8.3; 2022: -7.2; 2023: -6.1; 2024 Est.: -5.6; 2025 Proj.: -4.6.\n- Revenue and grants (percent of GDP): 2021: 15.5; 2022: 16.1; 2023: 15.7; 2024 Est.: 16.6; 2025 Proj.: 15.8.\n- Total expenditure (percent of GDP): 2021: 23.8; 2022: 23.2; 2023: 21.8; 2024 Est.: 22.2; 2025 Proj.: 21.4; 2026 Proj.: 20.5.\n- National government gross debt (percent of GDP): 2021: 60.4; 2022: 60.9; 2023: 60.1; 2024 Est.: 61.2; 2025 Proj.: 62.0; 2026 Proj.: 61.7.\n- Current account balance (percent of GDP): 2021: -1.5; 2022: -4.5; 2023: -2.7; 2024 Est.: -2.0; 2025 Proj.: -1.9; 2026 Proj.: -1.8.\n- Total external debt (percent of GDP): 2021: 27.0; 2022: 27.5; 2023: 28.7; 2024 Est.: 28.9; 2025 Proj.: 28.5.\n- Gross reserves (US$ billions): 2021: 108.8; 2022: 96.1; 2023: 103.8; 2024 Est.: 113.3; 2025 Proj.: 115.9; 2026 Proj.: 117.5.\n- Gross reserves (percent of short-term debt, remaining maturity): 2021: 512.3; 2022: 381.3; 2023: 384.7; 2024 Est.: 466.4; 2025 Proj.: 443.8; 2026 Proj.: 451.3.\n- Nominal GDP (US$ billions): 2021: 394.1; 2022: 404.4; 2023: 437.1; 2024 Est.: 469.5; 2025 Proj.: 506.0; 2026 Proj.: 548.4.\n- Nominal GDP per capita (US$): 2021: 3,580; 2022: 3,645; 2023: 3,906; 2024 Est.: 4,148; 2025 Proj.: 4,424; 2026 Proj.: 4,745.\n- GDP (in billions of pesos): 2021: 19,411; 2022: 22,028; 2023: 24,319; 2024 Est.: 26,432; 2025 Proj.: 28,691; 2026 Proj.: 31,260.\n- Real effective exchange rate (2010=100): 2021: 111.1; 2022: 109.3; 2023: 113.1.\n- Peso per U.S. dollar (period average): 2021: 54.5; 2022: 55.6." }, { "heading": "Policy recommendations (summarized)", "content": "- Monetary:\n - Gradually ease the policy rate towards neutral with a data‑dependent approach and careful communication.\n - Use the exchange rate as a shock absorber; deploy FXI under certain circumstances.\n - Establish a credible yield curve to develop the fixed-income market.\n- Macroprudential and financial sector:\n - Monitor rapid consumer loan growth; adjust macroprudential policy as needed.\n - Move toward a positive neutral level for the countercyclical capital buffer.\n - Strengthen capacity to assess financial stability risks and resolve troubled institutions.\n- Fiscal:\n - Support gradual consolidation with a concrete, sustainable plan to raise tax revenues and implement expenditure reforms.\n - Consider additional tax measures to create space for priority spending.\n - Prioritize excise tax measures, VAT efficiency, tax administration improvements, and control of tax incentives.\n - Reform military and uniformed personnel pension system; improve expenditure efficiency; manage fiscal risks.\n- Structural reforms:\n - Implement comprehensive, well-sequenced reforms to unlock medium-term potential: infrastructure upgrades; investments in healthcare and education; agricultural productivity measures; governance enhancements.\n - Strengthen social protection and pursue digitalization to improve education access, financial inclusion, and public spending efficiency.\n- AML/CFT:\n - Continue addressing AML/CFT issues, reform bank secrecy law, and prepare for the next mutual evaluation in 2027.\n\nInternational Monetary Fund — Executive Board conclusions on the 2024 Article IV consultation with the Philippines.\n\n---\n\n\n References\n\n- Philippines and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/12/17/pr-24478-philippines-imf-concludes-2024-article-iv-consultation" } ], "bullets": [ "[Markdown version](/en/news/articles/2024/12/17/pr-24478-philippines-imf-concludes-2024-article-iv-consultation/index.md)", "[Structured JSON version](/en/news/articles/2024/12/17/pr-24478-philippines-imf-concludes-2024-article-iv-consultation/index.json)", "[Bundle manifest](/en/news/articles/2024/12/17/pr-24478-philippines-imf-concludes-2024-article-iv-consultation/bundle-manifest.json)", "Published: December 20, 2024", "On December 4, 2024, the Executive Board of the International Monetary Fund (IMF) concluded the 2024 Article IV consultation with the Philippines.", "Press Release No. 24/478.", "Date of press release listed: December 19, 2024.", "2022: strong post-pandemic rebound.", "2023: Growth moderated, growing by 5.5 percent.", "First three quarters of 2024: Growth recovered to 5.8 percent, driven by strong public consumption and public construction; partially offset by El Nino and subdued private consumption.", "Inflation (year-on-year) in October 2024:", "Current account deficit:", "Banking system: has weathered the high interest environment with sufficient liquidity and capital buffers.", "Growth:", "Inflation:", "Current account deficit:", "Risks to near-term growth outlook are tilted to the downside, including:", "General appraisal:", "Growth and inflation outlook:", "Monetary policy guidance:", "Financial stability and macroprudential policy:", "AML/CFT:", "Fiscal policy and public finances:", "Structural reforms and medium-term potential:", "Demographic:", "Poverty:", "Inequality (2021, income shares):", "IMF quota: SDR 2,042.9 million.", "Main export products: electronics, mineral, agro-based products, equipments, and chemicals.", "Real GDP (percent): 2021: 5.7; 2022: 7.6; 2023: 5.5; 2024 Est.: 5.8; 2025 Proj.: 6.1; 2026 Proj.: 6.3.", "Consumption (percent): 2021: 4.7; 2022: 7.7; 2023: 5.4; 2024 Est.: 6.0.", "Gross fixed capital formation (percent): 2021: 9.8; 2022: 8.2; 2023: 8.6; 2024 Est.: 8.9.", "Net exports (contribution to growth): 2021: -2.3; 2022: -2.2; 2023: 0.0; 2024 Est.: -1.0; 2025 Proj.: -1.1.", "Real GDP per capita (percent): 2021: 4.9; 2022: 6.7; 2023: 4.6; 2024 Est.: 5.0; 2025 Proj.: (not listed).", "Output gap (percent, +=above potential): 2021: -3.5; 2022: 0.4; 2023: 0.2; 2024 Est.: -0.2; 2025 Proj.: -0.1.", "Unemployment rate (percent of labor force): 2021: 7.8; 2022: 4.4; 2023: 4.0; 2024 Est.: 4.5.", "Underemployment rate (percent of employed persons): 2021: 15.9; 2022: 14.2; 2023: 12.3.", "Claims on private sector (in percent of GDP): 2021: 49.9; 2022: 48.9; 2023: 48.3; 2024 Est.: 49.3; 2025 Proj.: 50.8; 2026 Proj.: 52.2.", "Claims on private sector (yoy growth rate): 2021: 3.8; 2022: 11.1; 2023: 9.1; 2024 Est.: 11.0; 2025 Proj.: 11.9.", "National government overall balance (percent of GDP, IMF definition): 2021: -8.3; 2022: -7.2; 2023: -6.1; 2024 Est.: -5.6; 2025 Proj.: -4.6.", "Revenue and grants (percent of GDP): 2021: 15.5; 2022: 16.1; 2023: 15.7; 2024 Est.: 16.6; 2025 Proj.: 15.8.", "Total expenditure (percent of GDP): 2021: 23.8; 2022: 23.2; 2023: 21.8; 2024 Est.: 22.2; 2025 Proj.: 21.4; 2026 Proj.: 20.5.", "National government gross debt (percent of GDP): 2021: 60.4; 2022: 60.9; 2023: 60.1; 2024 Est.: 61.2; 2025 Proj.: 62.0; 2026 Proj.: 61.7.", "Current account balance (percent of GDP): 2021: -1.5; 2022: -4.5; 2023: -2.7; 2024 Est.: -2.0; 2025 Proj.: -1.9; 2026 Proj.: -1.8.", "Total external debt (percent of GDP): 2021: 27.0; 2022: 27.5; 2023: 28.7; 2024 Est.: 28.9; 2025 Proj.: 28.5.", "Gross reserves (US$ billions): 2021: 108.8; 2022: 96.1; 2023: 103.8; 2024 Est.: 113.3; 2025 Proj.: 115.9; 2026 Proj.: 117.5.", "Gross reserves (percent of short-term debt, remaining maturity): 2021: 512.3; 2022: 381.3; 2023: 384.7; 2024 Est.: 466.4; 2025 Proj.: 443.8; 2026 Proj.: 451.3.", "Nominal GDP (US$ billions): 2021: 394.1; 2022: 404.4; 2023: 437.1; 2024 Est.: 469.5; 2025 Proj.: 506.0; 2026 Proj.: 548.4.", "Nominal GDP per capita (US$): 2021: 3,580; 2022: 3,645; 2023: 3,906; 2024 Est.: 4,148; 2025 Proj.: 4,424; 2026 Proj.: 4,745.", "GDP (in billions of pesos): 2021: 19,411; 2022: 22,028; 2023: 24,319; 2024 Est.: 26,432; 2025 Proj.: 28,691; 2026 Proj.: 31,260.", "Real effective exchange rate (2010=100): 2021: 111.1; 2022: 109.3; 2023: 113.1.", "Peso per U.S. dollar (period average): 2021: 54.5; 2022: 55.6.", "Monetary:", "Macroprudential and financial sector:", "Fiscal:", "Structural reforms:", "AML/CFT:", "[Philippines and the IMF](http://www.imf.org/external/country/PHL/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2024/12/17/pr-24478-philippines-imf-concludes-2024-article-iv-consultation/index.md", "json": "/en/news/articles/2024/12/17/pr-24478-philippines-imf-concludes-2024-article-iv-consultation/index.json", "bundleManifest": "/en/news/articles/2024/12/17/pr-24478-philippines-imf-concludes-2024-article-iv-consultation/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T03:30:46.313Z" }