Announcement of Philippine Consultative Group Meets in Paris on February 2, 1981

• •Q. . · . 'f0 R~11\fMED1AlJ ·REL~ASE -: " . - 1 . g"t lr, l •world Bank rt J .) 1818 H Street, t\J.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE February 2, 1981 PH I LI PP I NE CONSUi.TAT! VE GROUP MEETS IN PARIS Following is the text of the press release issued at the conclusion of the Consultative Group meeting on January 30th in Paris: The tenth meeting of the Consultative Group for the Philippines was held in Paris on January 29 and 30, 1981, under the chairmanship of the World Bank. The meeting was attended by the representatives of Australia, Belgium, France, Germany~ India, Italy, Japan, New Zealand, Spain, Switzerland, the United Kingdom, and the United States. Also present were representatives of the Asian Development Bank, Commission of European Communities, Food and Agriculture Organization, International Finance Corporation, International Labor Office, International Monetary Fund, Orga- nization for Economic Cooperation and Development, United Nations Development • Programme, World Food Council, and the \./orld Food Programme. The Philippine delega- tion was led by the Honorable Cesar Virata, the Minister of Finance . The documentation before the meeting consisted of the Philippine Government's Economic Report, its updated five-year development plan for 1978-82, and its food and nutrition plan. A World Bank report on "Aspects of Poverty in the Philippines" was also considered by the group. Minister Virata read a message from His Excellency Ferdinand E. Marcos, the President of the Philippines, greeting the delegates. The message noted the recent lifting of martial law and the government's commitment to normalizing the country's political system and institutions. The reforms made in land tenure, taxation, finance, industry, agriculture, energy, infrastructure, trade, and social areas provide a promising base for the successful completion of the political transition. The meeting noted that, despite adverse developments in the world economy, the Philippines GNP had grown by about 5% in 1980. The rate of inflation had a~so been slowed. However, despite a large increase in exports, the current account deficit of the balance of payments had widened, principally because of the increased cost of oil imports. The meeting discussed the measures that the government had taken in the last year to make structural adjustments i, the economy and the balance of payments. Sub- stantial progress had been made in the last year in industrial anrj financial policy reform. Tariffs and other protective trade restrictions had been lowered, and com- prehensive improvements had been made in export incentives. Banking laws and regula- • tions had been reformed to increase the competitiveness, flexibility, and efficiency of the financial system. Interest rate policy was also being rev1rsed to establish market-oriented rates. These industrial and financial reforms were expected to lec.d to long-term improvements in both the balance of paymerts and the rate of employment creation. I ...  - 2 - The meeting discussed the revised plan for the 1981-82 period. It concurred that growth of 5-6% per year seemed attainable despite adverse • lnternational economic conditions and agreed with the desirability of accelerated domestic energy production. It noted that further measures to achieve the necessary structural adjustment, a strong public revenue effort, continued reduction in population growth rate, and more balanced regional development were also important objectives. Priorities among the government's industrial, energy, and poverty alleviation programs would also have to be carefully weighed. The meeting discussed the dimensions and dynamics of poverty in the Philippines based on a report prepared by the World Bank in cooperation with the government. Although the level of poverty had dropped since the 1950s, it still posed a challenge to the country. The meeting agreed that the poverty profile showing the degree and concentration of poverty in various areas, sectors, and occupations should prove useful for devising well-focused poverty alleviation programs. The government stated that poverty alleviation was one of its major development goals and outlined its programs in both productive and social sectors. According to the government, these programs have reduced poverty significantly in the last few years. The government expressed its intention to continue to emphasize poverty alleviating programs as part of its overall develooment strategy. Various delegates commended the government on its commitment to poverty alleviation and ~ promised to support it in its efforts. The government delegation presented its innovative food and nutrition plan to the Group. This plan aims at stimulation of the food economy, export generation and import substitutJonj maintenance of consumer and pro- ducer prices at reasonable levels, and immediate action to correct the most serious nutritional deficiencies. Specific programs and projects to implement the plan would be forthcoming in the next year. Although the government's structural adjustment program would in due course reduce the balance of payments deficit, the Philippines will need sub- stantial capital inflows to maintain the momentum of development in the meantime. In the ten years that the Group had been in existence, ODA had increased from about $50 million in 1970 to ~1.1 billion in 1980_ While a major share of the Philippinesi capital requirements would have to be met by private sources, ODA would still need to expand at a moderate rate in real terms. ODA commitments of approximately $1.2 billion were expected to be available in 1981. The Group agreed to meet again in March of 1982. - 0 - •