International Finance Corporation
A Helping Hand
 The International Finance Corporation, the private investment arm of the World Bank Group that is observing its 50th anniversary this year, has been a major source of investment funds for the Philippines. In 1966, IFC undertook its first project in the country, and in 1977, it opened its first office outside of its Washington, D.C., headquarters in the Philippines. Over the years, IFC has poured in nearly US$2 billion in cumulative investments into the country, involving 80 projects nationwide, making it a major catalyst in improving the lives of millions of Filipinos.
As of January 2006, IFC’s outstanding exposure in the Philippines was placed at US$500 million in 35 projects. This amount puts the Philippines among IFC’s top 10 country exposures. The investments have gone towards deepening and diversifying the financial sector, supporting viable infrastructure projects (especially in transportation, energy, and water), and assisting in reviving the mining sector with model sustainable projects.
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| IFC has a minority stake in the Manila Water Company |
IFC is particularly happy with its investment mix in the Philippines, citing the country as the only one among its 178 member-countries where its involvement in most of the sectors has been successful. In water, sanitation, and irrigation, it has a minority stake in the Manila Water Company, the water concessionaire in the east zone of Metro Manila. Manila Water has dramatically reduced water losses and increased its service coverage. In transport, IFC is a shareholder in the Land Transportation Office’s project that computerized and interconnected 247 offices of the LTO. In the energy and power sector, IFC is involved in the National Power Corporation’s Small Power Utilities Group.
Apart from directly infusing equity in viable projects, IFC helps the country by way of technical assistance and advisory activities, especially in the areas of infrastructure and the development of small and medium enterprises.
Today, IFC’s focus in the Philippines is on deepening and diversifying the financial sector, including housing and municipal finance; pursuing opportunities to develop such export-oriented sectors as electronics and tourism, as well as such high-impact businesses as small and medium enterprises; and promoting a better business environment through global benchmarking that helps policymakers better determine priorities for business regulation reform. 
| Signals |
 GDP grew 5.5% in the first quarter from 4.2% a year ago. GNP also expanded 5.8% from 4.9% last year, despite a slowdown in growth of net factor income from abroad to 8.8% from 12.9%. Although growth in services slowed down to 6.2% from 7.0% because of high fuel prices, manufacturing pushed growth in industry to 5.5% from 3.4% and growth in agriculture, fishery, and forestry also recovered to 3.8% from a 0.5% slump.
Inflation slowed down for the second straight month, falling to a four-month low of 6.9% in May. Despite five rounds of fuel price hikes during the month, only clothing and services posted accelerated price hikes, while all other categories in the consumer price basket registered decelerated cost increases. Inflation for food, beverages, and tobacco slowed down to 5.9%, while inflation for nonfood items also declined to 7.8%.
The country’s gross international reserves reached another all-time high of US$20.9 billion in end-May. The GIR level is equivalent to 4.4 months’ worth of imports of goods and payments of services and income.
Fiscal surpluses in April and May reduced the government’s overall fiscal deficit by 34.8% to P44.2 billion in the first five months from P67.8 billion a year ago. Revenues increased 19.3% to P389.8 billion from P326.8 billion following a 20.7% rise in BIR collections and 28.0% hike in BOC collections. On the other hand, public spending increased 10.0% to P433.9 billion from P394.5 billion.
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