Philippines - Current economic position and prospects

RESTRICTED Report No. EAP-30a This report is for official use only by the Bank Group and specifically authorized organizations or persons. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION CURRENT ECONOMIC POSITION AND PROSPECTS OF THE PHILIPPINES May 10, 1972 East Asia and Pacific Department  CURRENCY EQUIVALENTS Before February 21,3 1970 US$ 1000 Pesos 3q90 Pesos 1,000 US$ 256040 Pesos 1 million US$ 256,40C After February 21, 1970 1/ US$ 1000 Pesos 6.77 - Pesos 1,000 US$ 147070 Pesos 1 million US$ 147,700 FISCAL YEAR In the Philippines, the Fiscal Year covers the period July 1 to June 30. 1/ During the period September 1970 to April 30, 1972, the interbank guiding rate remained at Pesos 60435; subsequently the rate has fluctuated and on May 8 stood at Pesos 6.7685.  This Report is based on the findings of an Economic Mission which visited the Philippines in October/ November 1971. Its members were: Parvez Hasan Chief of Mission Miss Hayley Goris General Economist George C. Maniatis General Economist Warren P. Hogan Industrial Economist Geoffrey Shepherd Industrial Economist David J. Turnham Euployment Expert Shahid Javed Burki Employment Consultant Mrs. Kazuko Artus Domestic Savings This Report was partly updated by the Economic Mission which visited the Philippines in March 1972. Its members were: Mr. Hasan, Miss Goris, Mr. Cheetham, Mr. Shepherd and Mr. Ramgopal Agarwala.   TABLE OF CONTENTS Page COUNTRY DATA MAP SUMMARY AND CONCUJSIONS i - vii CHAPTER I - Recent Trends and Economic Outlook 1 CHAPTER II - External Debt and Balance of Payments 14 CHAPTE;R III - Resource Mobilization for the Public Sector 26 CHAPTER IV - Agricultural Development and Policy Issues 31 CHAPTER V - Industrial Growth and Government Policies 46 CHAPTER VI - Employment Trends, Problems and Prospects 59 CHAPTERI VII - Trends in Income Distribution 72 ANNEX A - Export Projections, 1972-75 ANNEX 13 - Estimates of Gross Fixed Capital Formation STATISIICAL APPENDIX   Page 1 of 2 COUNTRY DATA Area 297,000 square kilometers Population Total (mid-year 1971) 38 million Rate of Growth (1960-1970) 3.1 % Density 128 per square kilometer Crude Birth Rate (per 1,000 population;1970) 45 Crude Death Rate (per 1,000 population;1970) 12 Nutrition Calorie intake as % of requirements 76 Per caput protein intake(grammes) 47 Health Population per physician (1970) 2,630 Population per hospital bed (1970) 670 Education Literacy rate (1965) 72 Primary School Earolment (7-12 years old;1970) 119 % ./ Secondary School Enrolment (13-16 years old;1970) 62 % Income Distribution Lowest Quintile (1965) 3.5% Highest Quintile(1965) 55.4% Unmloyment 1959-1961 1966-1968 ( Labor Force) 6.2% 7.5% Family Planniz! 1969 1970 1971 (1,000 new acceptors) 210 4000 Gross National Product Total 1971 (current market prices) Y48,110 million 2/ Real Growth Rate 1971 6.5% Per caput GNP 1971 US$197 Gross Domestilc Expenditure 1969 1970 1971 2/ Consuwption(current prices; percent of GDP) 78.0 1_.6 Private 71.9 70.2 72.8 Public 9.8 7.8 8.8 Gross Domestic Capital Formation 19.9 20.4 21.4 Gross Domestic Saving 14.7 16.7 19.3 Resource Gap 3/ 5.2 3.4 2.1 Statistical Discrepancy 3.6 5.3 -3.0 Central Government Operations(million pesos) FY 1969 FY 1970 FY 1971 Revenue from Domestic Sources 2,B29- 3,111 4,297 Current Expenditures 3,056 3,328 3,758 Capital Expenditures 4/ 661 975 775 1/ Excess of 100% indicates presence of over age students 2/ Preliminary 3/ Including Balance of Payments Errors and Omissions ;/ Including foreign financed outlays; excluding capital transfers  Country Data Page 2 of 2 Money and Credit(annual rate of change in %) 1969 1970 1971 Money Supply 19 6 10 Time and Savings Deposits 10 20 21 Total Bank Credit Outstanding 25 6 7 Price Indlces(% increase) Consumer Price Index for the Philippines 1.7 15.3 23.1 General Wholesale Price Index for Manila 0.7 19.5 15.7 Balance of Payments(US$ Million) 196 1 1971 1/ Merchandise eJports 875 1 3 1 Merchandise imports 1,132 1,090 1,186 Net services -133 -141 - 59 Net transfer payments(public and private) 155- 119 134 Current account deficit/surplus -231i - 29 33 Net errors and omissions -125 -224 -165 Major Exorts (% of total eoports) Coconut products 19 20 23 Sugar products 18 18 20 Forest products 30 28 23 Mineral products 19 21 19 Other 14 13 X 100 100 100 Foreign Exchange Reserves(US$ Million) 1970 1971 Net Reserves, June - 71 - 10 December - 46 - 20 External Public and Private Debt (-US$ Mill-ion)' Dec. 1970 Dec. 19r71 1-5 years' maturity 10 1h31 over 5 years' maturity 1.169 1.233 Medium and Long Term Debt Outstanding 1,67 Debt Service on External Debt (US$ Million) CY 1970 CY 1971 CY 1972 2/ Amortization (Medium and Long Tem) 264 302 8 Interest 9 86 1 Total 3 9359 397 Debt Service Ratio (debt service as- % of 26.8 27.6 28.1 merchandise and invisibles exports) Bank Operations(as of March 31, 1972) Bank loans outstanding US$ 135 million Undisbursed amount US$ 68 million IMF Position Quota US$ 168 million Drawings Outstanding (December 31, 1971) US$ 128.5 million Par Value up to February 21, 1970 ' 3.90 per US$ Floating since February 21, 1970 1/ Preliminary 2/ Projection  THE PHILIPPINES 0 40 80 120 160 Miles Loog Railways Approximate areas above 2000 feet -01 Dams * Power plants Son Fernnand Bago AMBUCL BING Torloa one LUZON A.'~~ ~~ L N T ,a M L bL e j;ijc MINDOI C~~~~~~~~~~~POLILLO A DA E MINDANAO< > CATANDUANES ) . 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