PHL taps IMF for technical assistance on exiting from accommodative policy

THE PHILIPPINES is tapping the International Monetary Fund (IMF) for technical assistance, with the aim of improving the central bank’s ability to transition away from the accommodative policy it adopted during the pandemic, the fund said.

In a country report, the IMF called the Philippines one of the largest recipients of capacity development (CD) assistance among emerging economies, with the fund providing “considerable” support in order to help the government pursue its reform agenda.

“The authorities have identified additional CD priorities where support from the IMF would further contribute to the reform agenda. Some of the assistance is already ongoing while other requests remain to be addressed,” the IMF said.

The IMF was also asked to assist with improving the monetary authorities’ inflation forecasting and enhancing the Bangko Sentral ng Pilipinas’ (BSP) data analysis capabilities.

“Support for the implementation of monetary policy will center on: (i) inflation forecasting and refinements to the BSP’s Policy Analysis Model for the Philippines to facilitate structured and data-coherent forecasting and integrated analysis of monetary and other policies,” the IMF said. 

The IMF was also asked to help the BSP reform its liquidity operations and to improve the central bank’s communication strategy, particularly on giving forward guidance when it comes to policy rates, making the Monetary Policy Report a flagship publication, communicating its exit strategy from crisis support measures, and how to best inform the public about digital money, cybercrime, and climate-related financial risk.

“The authorities have also requested the Fund to advise and provide training for a sandbox project on the development of a wholesale CBDC (central bank digital currency).”

Earlier this year, the BSP announced it was working on a pilot project that will test the use of wholesale CBDCs for large-value financial transactions by selected financial institutions.

In the financial sector, the IMF was requested to provide technical assistance on bank supervision and the establishment of a supervisory college.

The IMF was also asked to assess the expected credit loss model of banks and the operational resilience of the Philippine banking system.

“Requests have also been made by the Securities and Exchange Commission for TA (technical assistance) to develop risk management instruments and by the Bureau of the Treasury for TA to enhance its cash management, further develop the government’s debt management strategy, deepen the domestic debt market through innovative financial instruments, and develop a strategy to access the international capital markets,” the IMF said.

The fund was asked to review an ongoing program helping government-owned and -controlled corporations (GOCCs) enhance their financial reporting, the fund said.

According to the IMF, the Philippines has requested a follow-up mission to review the progress made on GOCC financial reporting since the assistance was first put forward in 2019.

The IMF was requested to provide guidance and help develop an implementation plan to bring the reporting frameworks of GOCCs and public-private partnerships in line with international standards. — Keisha B. Ta-asan