The International Monetary Fund expects the Philippine economy to grow at a faster pace of 5.8 percent this year, reflecting improved investor confidence following fiscal reforms, but it said it was still worried about the huge public debt.
The country's gross domestic product grew 5.4 percent in 2006, below the IMF's forecast of 5.5 percent.
"Public debt remains sensitive to rollover and exchange rate risks and external commercial borrowing requirements, while declining, are still significant," the IMF said.
It urged the government to sustain the reform momentum to maintain market confidence.
"Impressive fiscal reforms in an environment of sustained growth and declining inflation have strengthened market confidence in the Philippines," the Fund said.
The IMF said GDP growth could be stronger over the medium term if more reforms to reduce public debt are done.
"Continued reforms are also necessary to boost investment and growth and accelerate progress in reducing poverty," it said.
A renewed surge in oil prices, a slowdown in the global economy, and a sudden reversal in global risk appetite are the main downside risks to the outlook, it said.
In December the Philippine central bank paid in full the country's $219.7 million in outstanding obligations to the IMF, which triggered Manila's exit from a post-program monitoring arrangement with the Fund at the end of 2006.
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