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Thursday, October 16, 2008
Asean to set up standby fund
MANILA -- Asean officials have agreed to put up a standby fund to help countries that may suffer liquidity problems as a result of the global financial crisis, President Gloria Macapagal-Arroyo said Wednesday.
President Arroyo said the agreement was reached in Washington after a meeting of finance officials from the 10-member Association of Southeast Asian Nations (Asean) and their partners from Japan, China and South Korea and representatives of international lending institutions.
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Arroyo, in a speech after the oath-taking of the new officers of the Union of Local Authorities of the Philippines (Ulap) led by its new president, Mandaluyong Mayor Benjamin Ablos Jr., said the World Bank has pledged $10 billion as its contribution to the standby fund.
The President hoped that the International Monetary Fund (IMF), the Asian Development Bank (ADB), and the big economies in Asia, like China and Japan, would also contribute.
"The facility can also be used to purchase what the bankers call toxic assets and recapitalize troubled financial institutions and private companies. The Asean plus three members and the multi-laterals welcomed our initiative not only in providing access to financing but also more importantly in boosting confidence in the Asean economies," she added.
Asean is made up of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Arroyo said the World Bank and the IMF, in consultation with Asean finance ministers and central bank governors, would be drafting the implementing mechanism soon.
She said a meeting among the concerned officials would be convened to discuss the guidelines for the facility "which we suggested should be quick disbursing with minimal conditionalities."
The President, together with the other leaders of the Asean plus three, would be meeting at the sidelines of the Asia-Europe Meeting in Beijing on October 24-25 to further discuss the impact of the global economic crunch on the Asian economies.
She said the Asean plus three meeting is the counterpart to the meeting of the seven developed economies or G7 composed of the United States, United Kingdom, Canada, France, Germany, Italy, and Japan.
Arroyo said the Philippines had recommended it to Thailand, which is the chairman of the Asean this year.
She said the meeting is necessary as the world, aside from confidence, needs structural reforms and global cooperation.
She also called on the G7 members to consider the emerging economies "in the bold actions and measures that they plan to undertake to ease the crisis in the global financial system."
President Arroyo also announced that the Philippine government created an Expatriate Livelihood Support Fund (ELSF) to provide a buffer fund for Filipinos living and working abroad who may be displaced by the global economic meltdown.
Nearly 10 percent of the country's 90 million people work overseas. The money they send home is equivalent to about 10 percent of the country's gross domestic product.
"It can serve as a counterpart fund for returning expats' livelihood progress. The details will be fleshed out by the Department of Labor and Employment (Dole) and will be presented in another event," she said.
Arroyo said the support fund is part of the contingency plan that the labor department and the economic managers have also crafted to cushion the impact of a possible economic recession in the US on Filipinos here and abroad.
The contingency plan was presented in the Cabinet meeting in Malacañang last Tuesday and its full details would be made public starting with the Philippine Business Forum on October 22.
Arroyo said aside from the support fund, which is part of protecting the labor sector aspect, the contingency plan includes pump priming the economy, expanding social services, and upgrading the country's infrastructures.
Meanwhile, remittances from millions of Filipinos abroad rose 10.4 percent in August from a year ago, but their growth slowed compared to previous months even as the central bank warned Wednesday the global financial crisis might take a toll on workers.
Remittances - a key contributor to the Philippine economy - reached US$1.3 billion in August, 10.4 percent higher from the same period last year. In July, remittances grew 24.6 percent, the fourth consecutive month of double-digit growth.
Central bank deputy governor Nestor Espenilla Jr. said the global economic slowdown could put some dent on the growth of remittances, particularly in industrialized countries where most of an estimated 8.7 million Filipinos work.
Espenilla said, however, remittances will continue to provide strong support to the economy because demand for Filipino workers has been growing.
He did not provide any reason for the slower growth in August, a month before a dramatic worsening in the US credit crisis was felt around the world. (JMR/AP/Sunnex)
For more Philippine news, visit Sun.Star Iloilo. (October 16, 2008 issue)
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