The International Monetary Fund ( IMF) said on Tuesday that the overall economic performance of the Philippines last year was "positive" and marked by "solid economic growth".

"Directors commended the authorities for steadying the economic ship after the political turbulence in mid-2005 and for regaining momentum on their reform agenda," IMF said in its post-program monitoring report.

The country witnessed a 5.1 percent of growth rate in gross domestic products in 2005.

IMF holds annual post-program monitoring discussion with its member-countries by sending a team to member countries to collect economic and financial information.

IMF said the Philippines has achieved "solid economic growth"in 2005 despite weaker investment and net exports, and moderating inflation.

In a press briefing, IMF resident representative in Manila Reza Baqir said the reduction of the government's fiscal deficit, the passage of the expanded value-added tax (VAT) law and the sharp reduction in power sector losses boosted the market and investors' confidence and have strengthened the local currency.

"The market has reacted positively, the peso has strengthened in over three years and the Philippine assets rally more than the other (countries) assets," he said.

Baqir also called on the Philippines to sustain its economic reforms to keep the growth rate this year.

"If reforms were to stall, investment would likely to remain subdued, and GDP growth would likely to remain below five percent in 2006. The outlook would be brighter were strong reforms to continue," the IMF said in the report.

IMF said the Philippines has to strengthen its defenses against the significant short-term vulnerabilities, such as high debt levels, high oil prices and a possible outbreak of avian flu virus, by "sustaining the reform momentum by completing the remaining agenda for fiscal and other structural reforms and thereby enhance the economy's ability to absorb such shocks".

Aside from sustaining the economic reforms, the organization also urged the Philippines to push for the passage of economic bills pending before Congress such as the rationalization of tax incentives "to broaden the tax net and improve efficiency and equity."

The power sector should be accelerated to secure the needed investment, said IMF, adding that that the uncertainties that deterred potential deals have to be dispelled.

Source: Xinhua