Managing Director Christine Lagarde of International Monetary Fund (IMF) sees the Philippine economy growing by at least 5 percent in 2012 and in 2013, or better than the international lender’s earlier forecast for this year.

The IMF earlier forecasted gross domestic product growth or GDP to reach only 4.8 percent this year.

“In a very difficult time because of the financial crisis in other parts of the world, the Philippines is probably the only country of which have increased the growth forecast as opposed to other places in the world where decreased forecast,” Lagarde said in the press briefing on Friday.

“I know that the growth in 2012 will be well in excess of 5 percent. And we certainly are looking forward to 2013 being in the range of 5 percent as well and this is due in no little part to the excellent policy mix deployed by the Department of Finance and the central bank of the Philippines, and a combination of sound fiscal policy as well as sound monetary policy,” she added.

For its part, the Bangko Sentral ng Pilipinas (BSP) said that the Philippine economy has exhibited its inner strength characterized by sustained consumption, investment and public spending, increasing international reserves, improved fiscal position, stable banking system and higher investor confidence.

The IMF head said that economic growth must benefit the broader section of population, emphasizing the need for inclusive growth.

“We certainly have researched that demonstrate that inclusive growth is more sustainable and it really is to the credit of this government to make sure that growth is as inclusive as possible and that inequalities can be reduced,” she said.

While citing the fact that 42 percent of the country’s population live on less than $2 a day, Lagarde lauded President Benigno Aquino 3rd’s administration for its efforts to alleviate poverty, including the conditional cash transfer program.

Net creditor
Nonetheless, the IMF head cited the progress that the Philippines made in becoming a net creditor of the organization.

“Philippines is a net creditor to the IMF and has actually participated in the bilateral loans that have been put in place this year in order to contribute to the increased resources of the IMF to deal with the consequences of the financial crisis including for the crisis bystanders,” she said.

Lagarde also expressed favor for the imposition of higher sin taxes on products like cigarettes.

“If the so-called Sin Tax is voted on Monday [in Congress], that will be great progress for the revenue collection of the country,” she said.

On the BSP, the IMF head lauded it for doing a good job in its monetary policy definition and implementation. “And that seems to have worked reasonably well if you look at the inflation rate that has been very much kept under control and the sensible, appreciation of the currency,” she said.

The BSP has cut its policy rates a total of four times this year to a record low of 3.5 percent.

In response, the central bank said that it values its partnership with the IMF in pursuing a stable monetary and financial system in the Philippines and promised to continue its performance.

“Toward this end, the BSP will continue to help achieve a more sustainable and inclusive growth by safeguarding the stability of prices,” the central bank said.