IMF flags gaps in DOF's forecasting model

The International Monetary Fund (IMF) has recommended a major overhaul of the Department of Finance (DOF)'s macroeconomic forecasting system, citing the need for a more comprehensive and customizable framework to support fiscal policy analysis.

- By KEISHA TA-ASAN

In a high-level summary technical assistance report, the multilateral lender said that the IMF's Institute for Capacity Development conducted a scoping mission in late January 2023, initiated at the request of the DOF to enhance its macroeconomic analytical and forecasting capabilities.

The mission revealed that while the DOF utilizes the IMF's Globally Integrated Monetary and Fiscal model, its staff lacks the necessary training to recalibrate or modify the tool. This limits its ability to provide consistent and adaptive economic forecasting.

"The mission identified a need for substantial human capital development in macroeconomics and modeling within the DOF. The technical staff, while diverse in academic background, lacks formal training in advanced macroeconomic theory and modeling techniques," the IMF said.