NADI, Fiji—Finance Ministers and Central Bank Governors across the Association of Southeast Asian Nations (Asean) as well as China, Japan, and Korea have committed to deepen infrastructure finance and promote green bonds.
In a briefing here on Thursday, Asean+3 Finance Ministers and Central Bank Governors disclosed this commitment is part of a new tack the officials dub “Asean Bond Market Initiatives, or Abmi, Midterm Roadmap 2019 to 2022.”
The Midterm Roadmap 2019 to 2022 outlines the direction and major activities of the Abmi. The activities include the pursuit of the Asean+3 Multi-currency Bond Issuance Framework (Ambif) bonds.
“We expect that our efforts under the Abmi will help contribute to regional economic and financial stability and advance regional financial integration,” the joint statement issued from here by the Asean+3 Finance Ministers and Central Bank Governors said.
The Finance Ministers and Central Bank Governors also welcomed contributions to the capital increase proposal of the credit guarantee and investment facility as well as the expansion of the Ambif.
They also welcomed the revision of the “Good Practices for Developing a Local Currency Bond Market: Lessons from the Asian Bond Markets Initiative,” given the rising importance of local currency bonds in the region.
Thailand’s Central Bank Governor Veerathai Santiprabhob explained that promoting the use of local currencies in the region makes more sense given that these currencies “move together” and would lead to lower financing costs.
“The use of local currency is becoming more and more important. If you look at interconnectedness in trade and investment between Asean+3 countries, the interconnectedness has increased over time,” Santiprabhob added.
He also said the use of local currencies facilitate cross-border trade and the use of financial technology in the region. It will also help boost productivity.
China Deputy Central Bank Governor Chen Yulu said using multiple currencies will lessen risks. Yulu cited that the 1997 Asian financial crisis and the global financial crisis in 2008 were brought about by problems linked to single currencies.
On Wednesday, the Asean+3 Macroeconomic Research Office (Amro) said unresolved trade tensions between the United States and China will lead to slower economic growth for many countries, including the Philippines.
In its Asean+3 Regional Economic Outlook 2019 report, the Amro said this failure in resolving the trade tensions will lead the US to impose a 25-percent tariff on all its imports from China and vice versa.
The US stands to lose 0.3 percentage points while China stands to lose as much as 0.6 percentage points from its real gross domestic product (GDP) growth.
However, countries like the Philippines will not be spared from the adverse effects on the economy.
The Philippine economy stands to lose 0.10 percentage points in real GDP growth this year and next year under this adverse trade scenario.
The trade tension between the US and China is just one of the primary risks to the economy this year and next year. Amro said the Philippine economy is expected to post a growth of 6.4 percent this year and 6.7 percent next year.
Other risks include inflation and “pockets of financial vulnerabilities.” However, Amro said inflation is still expected to average 3 percent this year and next year, which is within government targets.
The relatively low inflation in the country, Amro Chief Economist Hoe Ee Khor said, indicates that the Bangko Sentral ng Pilipinas would have reason enough to ease monetary policy.