Announcement of Consultative Group for the Philippines on December 2, 1977

• World Bank. .E 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Teleplione: (2.02) 393-6360 BANK.NEWS RELEASE DECEMBER 2, 1977 CONSULTATIVE GROUP FOR THE PHILIPPINES The following announcement was issued today at the World Bank's Office in Tokyo. The seventh meeting of the Consultative Group for the Philippines was held in Tokyo on December l and 2, 1977, under the chairmanship of the World Bank. The meeting was attendeq by representatives of Australia, Belgium, Canada, France, Germany, India, Italy, Japan, New Zealand, Spain, Switzerland and the United States. Also present were representa- tives of the Asian Development Bank, the International Finance Corporation, the International Monetary Fund, and the United Nations Development Programme. The Philippine delegation was led by the Honorable Cesar Virata, Secretary of Finance. The documentation before the meeting consisted of economic • reports prepared by the World Bank and the International Monetary Fund and the Government's Five Year Development Plan for the period 1978-82. Secretary Virata read a message from President Marcos greeting the delegates and referring to the Government's objectives incorporated in the Five Year Development Plan of achieving more equitable distribution of the benefits of growth not only among income groups, but also among various regions of the country. Secretary Virata then briefed the group on the current economic situation. The Philippine economy had been very adversely affected by deterioration in its international terms of trade in the last several years, but despite these difficulties the growth in GNP had been maintained at slightly over 6·percent annually. The Government hac continued Its strong efforts to raise domestic taxes and the public investment program had grown rapidly to provide for needed public infrastructure and social services. The agriculture sector had performed w~i, and the Philippines, once a chronic importer of rice, had been vfrtua11y self-sufficient in this basic staple crop during the last two years. The deterioration in the terms of trade had, however, necessitated an increase in foreign borrowing, but the Government had continued to manage the debt prudently. The delegates to the meeting commended the performance of the Philippine Government in managing the economy in difficult international economic circumstances. The growth in non-traditional manufactured exports had been p~rticularly impressive as these exports • NOTE: Money figures are expressed in U.S. dollar equivalents. .. .I  ... 2 ... • had grown at a rate of 46 percent in 1976 and were conti.nuing to perform well in 1977. Intensive efforts would, however, be necessary to maintain the growth of exports, particularly through the realignment of tariffs and fiscal incentives.to reduce the disparities between incentives for import substitution and those for exports. The meeting also agreed that it was vital that Phil ippfne exports had adequate access to markets in forergn countries and that foreign licensing agreements allow for firms established in the Philippines to export to external markets. The meeting also noted that the Government had made a major effort to increase public resources, but needed to move ahead with planned tax reforms designed to share the costs of development more widely. An increase in the internal revenue generation of public corporations and financial institutions was also needed. Secretary of Economic Planning, Gerardo Si cat outlined the economic development strategy set out in the Philippine Five Year Plan. The Plan calls for an acceleration in the rate of growth of the economy to over 7 percent per annum, and an acceleration in the growth of per capita income to 4.6 per annum. lhe Plan gives attention both to the large infrastructural and industrial investments needed to provide the basis for the future growth in the economy and in the number of jobs and to investments in agriculture, health, education and other social sectors needed to provide for other fundamental needs of the population. For the first time, the Government has incorporated in the National Plan, the development plans of the Philippines' 13 regions which take into account local conditions and needs. This effort constitutes part of the Government's program to decentralize planning and development. The delegations congratulated the Philippine Government on the • preparation of the Plan and agreed that it constituted a sound framework for future development·. Particular stress was given to the need for investments which would help to reduce income disparities and improve conditions of low income people. In this connection, the Government is committed to expediting its agrarian reform and family planning programs. It was suggested that consideration of the population and family planning programs be given e1;,phasis at next year's Consultative Gr:oup meeting. The meeting recognized that, despite development efforts by the Government and the favorable long-term prospects of the economy, the level of income of the majority of the population is still low. In order to achieve the country.'s development objectives, substantial capital from abroad wi 11 be necessary: it is estimated that gross disbursements from medium- and long-term loans will need to amount to about $1.4 billion a year during the next two years. The meeting found that the Philippines should be able to obtain new commitments of Official Development Assistance of $750 - $800 mil lion in 1978, and should seek substantially higher amounts in succeeding years. This assistance would ensure that the necessary capital inflows can take place without adversely affecting the Philippines' • debt service position. It was agreed that the Group would meet again in about twelve months either in Washington or Paris. - 0 -