Announcement of the Second Meeting of the Consultative Group for the Philippines on June 23, 1972

LIN i"c./ Sl:!f INTERNATIONAL BANK FOR .R.ECONSTRUCTION AND DEVELOP·MENT 1818 H STREET, N.W., WASHINGTON 0. C. 20433. TELEPHONE: EXECUTIVE 3-6360 June 23, 19 72 Subject: Second meeting of the Consultative Group for the Philippines The second meeting of the Consultative Group for the Philippines was held in Tokyo on June 22 and 23, 1972 tmder the chairmanship of the World Bank. Representatives of the following countries were present: Australia, Canada, Germany, India, Japan, New Zealand, Spain, Switzerland, the United Kingdom, the United States and Yugoslavia. Also represented were the International Monetary Fund, the United Nations Development Progranme and the Asian Development Bank. The Philippine delegation was led by the Honorable Cesar A. Virata, Secretary of Finance. The Group discussed a report prepared by the World Bank on the current • econon,ic position and prospects of the Philippine economy. It was agreed that the Government had continued to manage a difficult balance of payments situa- tion well by limiting the incurrence of new external debt, holding down imports and containing the expansion of credit to levels needed to maintain growth targets. It was noted that adverse movements in the terms of trade together with a fall in Philippine rice producton had further strained the balance of payments in the past year and added to inflationary pressures. Under these circumstances the overall economic growth of 6 .5% in real tenns in 19 71 was a creditable achievement. The Group noted with satisfaction that since its last meeting there had been a substantial increase in official aid commitments to the Philippines on appropriately liberal terms which, if continued over time,, would help ease the burden of debt. However~ the Group agreed that the balance of payments would con tin~ ·to be tight in the next few years. Th~ ,Govemment would the ref ore have to continue to keep the growth of imports within the Hmits set by the growth of exports, external debt management and the amount of extet11al develop- ment assistance available. • It was also agreed\ that a larger proportion of total itives tment should be directed to the public SE~ctor and that, to this end, a major effort would be /more  - 2 - needed to prepare public investment projects. requested a substa.'ltial increase in technical assistance to help improve their capacity to prepare projects. ness to consider this request sympathetically. The Philippine delegation A number of representatives expressed willing- A major build-up of project • assistan-ce is also needed to provide a means of transferring external resources in adequate amounts to the Philippines. In the meantime commodity assistance will continue to be required in order to provide the Philippines _with the needed capital inflows on appropriate terms, although it was pointed out t~at this form of aid should not become a pennanent feature of the Phili~pine economy. It we.s stre$sed that a major additional effort to raise revenues in the Philippines would be required to increase public investment to the levels targeted for 1974, in the Phi.1.lppine Dev,alcpment Plan and to p:r:,;,ride· the matchir..g peso resources for externally assisted projects~ The Philippine delegation outlined a number of measures being taken to increase revenues e However, the Gro·\.!9 notr:.d. that Gover.nri1er1t ;:'.::::"_:-:1;-.:J.ues had risF.:n less th.s.11 GHP at cur.cent prices in the pc.st yaar., A nurtiber of countries and agencies inci:f.catcd that they • were ~-Ji.Hing to increase their level of support to the Philippines provided the Philip:~,5.::.·!.es for :!.ts part matched this with a g;:""eate:r. effort to raise resources and prepare projects. :1-:. - Ph1." l1''p pin-.;; '7"he ~ :-:. ~1e_ega,:1.on A 1 ' u 'h e s t U: d-1es reporcec on ~na progress or n J, ., .,.• • on ,... foreign investment suggested at the last meeting an.cl said they :i.ntended to publish n~xt month an interim report summarizing the factual finding. Noting the important cont;ibution th.e.t private foreign in-r.;estment C&'"'l make in support of the Philippine Development Program:, the Group expressed keen interest in these studies and in reCf3iving copies of the interim report when it is published. A number of possible projects for exte:rnal assistanc.e were discussed with particular emphasis on the transport sector~ including roads~ ports and shippingo Representatives of countries &:.d institutions providing assistance to this sector agreed to coordinate their a{:tivities more closely. It was provisionally agreed that the next meeting of the Group tvould be held in June 1973 in Paris~ - 0 - •