ABS-CBN News, 22 November 2011
MANILA, Philippines – The Philippines is “well-positioned” to cope with any new financial shock that may evolve from the current global turmoil, but it still needs to attract more investments, the World Bank (WB) said.
To do this, the multilateral lender urged the Philippine government to develop much-needed infrastructure through the Public-Private Partnership (PPP) program.
“In the Philippines, the quality of urban and rural infrastructure is a major constraint, including roads, ports and airports,” the WB said in its East Asia and Pacific Economic Update.
“It’s in this context where the country’s program to attract investments in infrastructure development becomes even more important,” WB Acting Country Director Chiyo Kanda also noted.
“The government is accelerating the implementation of its public investment and PPP program. Mobilizing private sector resources — technical, managerial and financial — to boost delivery of essential economic and social services and infrastructure is a step in the right direction,” he said.
The World Bank said the Philippines will need higher level of investments in infrastructure, education and social services if it hopes to sustain growth above 5%.
The country’s annual growth slowed to 3.4% in the second quarter from the previous quarter’s revised 4.6%, due largely to sluggish exports and weak spending.
“The government needs to accelerate public spending,” the WB report said. “Raising more revenues through improved tax administration and policy reforms will enable the government to meet its priority spending targets, especially in infrastructure and human capital investment.”
Nonetheless, the World Bank believes the Philippines is “well-positioned” to cope with any new financial shock that may arise from the debt woes in the Europe and US.
It said the banking and financial sector’s conservative stance in the years following the Asian financial crisis in 1998 has helped ensure a healthy balance sheet for the country.
“The country is well-insulated from the global financial crisis owing to a significant improvement of macroeconomic fundamentals and regulatory reforms already in place following the Asian financial crisis,” the WB report said.
This year, the World Bank projects East Asia, excluding China, to grow 4.7%. It forecasts the Philippines to grow 4.2% and 4.8% in 2012.