THE International Monetary Fund (IMF) stressed on Monday the importance for economies in Asia to develop domestic sources of demand to convert the intensifying economic problems in advanced economies into growth in the region.

At a briefing that also launched the IMF’s Regional Economic Outlook, the Fund reiterated the need for the Philippines not only to be more flexible in allowing the local unit, the peso, to appreciate but more important for the government to spend more for infrastructure while also building social safety nets.

The overall objective, the IMF said, was to achieve sustainable growth for the Philippines at a time when the risks to continued expansion pose a serious challenge to economies across the region.

“The intensifying economic problems in advanced economies confirm that Asia would greatly benefit from further progress in developing domestic sources of demand. This would require more exchange-rate appreciation and greater priority to spending on infrastructure and social safety nets. These measures would not only help increase domestic demand over time but would also reduce income inequality in the region and make growth in Asia more inclusive,” the IMF said.

The IMF previously scaled back the country’s local output this year measured as the gross domestic product to 4.7 percent from forecast growth announced in April when growth for the Philippines was seen averaging at least 5 percent.

“For the Philippines, the key challenge is to navigate the uncertain global environment while creating policy space to meet future potential shocks and building the foundations for faster and more inclusive medium-term growth,” the IMF said, noting the growth-boosting measures contained in the government’s six-year Philippine Development Plan (PDP).

It also noted the social impact of the government’s conditional cash-transfer program which helped mitigate the economic impact of the global slowdown on less privileged Filipinos.

The IMF lauded the government for recognizing under the PDP the need for higher spending on health and education and greater public investment to achieve higher per-capita income growth which tends to reduce poverty incidence in the country.

“A continuation of revenue-based fiscal consolidation, reorientation of expenditure toward social and infrastructure priorities and reforms to strengthen the investment environment will be key to these efforts,” the IMF said.

 Anoop Singh, IMF director for Asia Pacific, noted public and private investment rates in the Philippines are rather low and certainly have room for much improvement.

The country’s revenue base was also considered low and urged the government to address this issue.

Addressing the low revenue base was important because the government’s proposed infrastructure build-up “needs fiscal resources” to back them up, Singh said.

Bangko Sentral ng Pilipinas (BSP) Gov. Amando M. Tetangco Jr. said the IMF’s presentation on the region’s economic outlook and policy challenges merits close attention and was something that government policymakers like himself eagerly awaited.

“The second important policy prescription that the REO focuses on is building inclusive growth. This is one goal that the BSP, in partnership with its stakeholders, is seriously promoting. We simply do not aim for high growth; we aim for growth that benefits the mass of the Filipino people,” he said.

This pertains to ongoing BSP support in institutionalizing microfinance which provides the entrepreneurial poor access to collateral-free loans and various financial services including deposits, payments services, money transfer and even insurance.

The BSP also institutionalized the Credit Surety Fund program whose existence allow micro borrowers as well as small and medium-scale entrepreneur borrowers to borrow from banks also collateral free by leveraging on the strength of the cooperative movement in the country.

In addition, the BSP is an advocate of financial education via its Economic and Financial Learning program which unifies the central bank’s educational outreach programs across the different sectors of the country.