## IMF Staff Concludes Visit to the Philippines

_IMF News, May 22, 2025_

## Source details

**Canonical URL:** [IMF Staff Concludes Visit to the Philippines](https://www.imf.org/en/news/articles/2025/05/22/pr-25156-philippines-imf-staff-concludes-visit-to-the-philippines)

## Other formats

- [Markdown version](/en/news/articles/2025/05/22/pr-25156-philippines-imf-staff-concludes-visit-to-the-philippines/index.md)
- [Structured JSON version](/en/news/articles/2025/05/22/pr-25156-philippines-imf-staff-concludes-visit-to-the-philippines/index.json)
- [Bundle manifest](/en/news/articles/2025/05/22/pr-25156-philippines-imf-staff-concludes-visit-to-the-philippines/bundle-manifest.json)

## Bibliographic details
- Published: May 22, 2025

---

### Overview
- IMF team led by Ms. Elif Arbatli Saxegaard held meetings in Manila during May 14-20, 2025.
- Mission will not result in a Board discussion; views expressed are those of IMF staff.
- Statement issued May 22, 2025.

### Growth and external outlook
- GDP growth projections:
  - 5.5 percent in 2025
  - 5.8 percent in 2026 ("next year")
- Risks:
  - Downside risks warranted close attention, driven mainly by external factors and the weaker-than-expected outturn in the first quarter.
  - Announced US tariffs expected to have a limited direct impact but contribute to higher global policy uncertainty and lower growth in major economies.
- Current account and reserves:
  - Current account deficit projected to narrow from 3.8 percent of GDP in 2024 to 3.4 percent of GDP in 2025.
  - Reserves have declined since peaking in September 2024 but remain adequate at $105.3 billion as of April 2025.

### Inflation and monetary policy
- Recent inflation outcomes:
  - Headline inflation fell to 1.4 percent (y/y) in April 2025.
  - Core inflation declined to 2.2 percent.
- Projections and risks:
  - Inflation projected to stay near the lower end of the target band at 2.2 percent in 2025.
  - Risks of higher inflation: adverse weather and other supply shocks, potential disruptions in global supply chains, and risk-off shocks contributing to currency depreciation.
  - Risks of lower inflation: weaker global demand prospects and excess capacity in certain sectors, including through lower commodity prices.
- Monetary policy guidance:
  - The Bangko Sentral ng Pilipinas (BSP) has room to continue to reduce the policy rate and firmly move to a neutral stance.
  - Prospect of further monetary easing and lower food prices expected to underpin recovery in consumption.
- Market and transmission reforms welcomed:
  - Reforms include launch of the interest rate swap market, enhanced Primary Dealer System, and consolidation of bond issuance into fewer but benchmark-sized instruments to enhance monetary policy transmission.

### Fiscal policy and public finance
- Fiscal outcomes and stance:
  - Fiscal deficit declined from 6.1 percent of GDP in 2023 to 5.7 percent in 2024.
  - Overall fiscal stance expected to be broadly neutral in 2025.
- Policy priorities and recommendations:
  - Adhering to the medium-term fiscal consolidation path remains critical.
  - Need for a sustainable plan to raise tax revenues and implement expenditure reforms to meet deficit targets and create space for priority spending.
  - Tax reform options to prioritize:
    - raising excise taxes
    - enhancing VAT efficiency
    - improving tax administration
    - ensuring effective control of tax incentives
  - Continue efforts to enhance public financial management and manage fiscal risks.
  - Enhance capacity at the local government level to execute additional spending responsibilities in line with higher revenues allocated through decentralization.

### Financial sector resilience and risks
- Systemic assessment:
  - Systemic financial risks remain contained.
  - Credit growth remains healthy.
  - Banking system has strong capital and liquidity buffers.
- Areas for continued monitoring:
  - Banks’ exposures to commercial and residential real estate.
  - Exposures to leveraged non-bank financial institutions.
  - Fast-growing consumer credit market.
- Macroprudential and supervisory recommendations:
  - Adjust macroprudential policy as credit picks up, including moving toward a positive neutral level for the countercyclical capital buffer to help preempt buildup of vulnerabilities.
- Regulatory progress:
  - Important progress on AML/CFT issues, exemplified by the Philippines’ exit from the Financial Action Task Force (FATF) grey list in February 2025; momentum should be maintained.

### Structural reforms and development priorities
- Country strengths:
  - Significant potential with a sizable demographic dividend and abundant natural resources.
- Ongoing reforms and recommended complements:
  - Reforms underway to reduce infrastructure, health and education gaps, promote foreign direct investment, and diversify export markets.
  - Complementary actions recommended:
    - strengthen social protection programs
    - promote digitalization
    - increase resilience to climate shocks and natural disasters

### Mission engagement and next steps
- The IMF team thanked government, central bank, other public agencies, and private sector representatives for constructive engagement.
- Continued dialogue expected in the coming months in the context of the 2025 Article IV Consultation.

*IMF Staff Concludes Visit to the Philippines, May 22, 2025.*

---


## References

- [Philippines and the IMF](http://www.imf.org/external/country/PHL/index.htm)
- [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)

_Source: https://www.imf.org/en/news/articles/2025/05/22/pr-25156-philippines-imf-staff-concludes-visit-to-the-philippines_