THE chairman of the House Committee on Ways and Means said strong growth and investment in the agriculture sector will be key to ensuring that the Philippine economy sustains high economic growth levels this year.
Albay Rep. Joey Sarte Salceda made a statement during the weekend as the International Monetary Fund (IMF) warned that emerging economies such as the Philippines could face “economic turbulence” following developments in US monetary policy and the surge in Covid-19 Omicron variant cases.
Salceda said the strength of the agricultural sector will determine general inflation and wage pressures.
“We have several defenses against a bad tide. We can keep our monetary policy easy with low interest rates. We can continue our massive investments in infrastructure and other public spending programs. We can continue to encourage investments in the Philippines. But, all of that has something to do with agriculture, especially food prices,” Salceda said.
In a post titled “Emerging Economies Must Prepare for Fed Tightening,” IMF economists Stephan Danninger, Kenneth Kang and Helene Poirson said policy-makers may need to react by pulling multiple policy levers depending on the actions of the US Fed, as well as challenges in their respective countries.
“While the global recovery is projected to continue this year and next, risks to growth remain elevated by the stubbornly resurgent pandemic.
Given the risk that this could coincide with faster Fed tightening, emerging economies should prepare for potential bouts of economic turbulence,” the IMF warned.
Moreover, Salceda said “If prices are high, real economic growth will slow down.”
“If food prices are high, the pressure to increase wages will also be stronger, resulting in a labor market that is not as competitive for investors. Agricultural output will really be important,” Salceda said.
On the other hand, Salceda said “if food prices are good during this year, we can also keep our interest rates low, because there will be far less pressure to rein in inflation.”
According to Salceda, Philippine agriculture is one sector where there is plenty of under-investment.
“We are coming from a very low base, as we lag most of our neighbors in nearly every major crop. There are also investment gaps in mechanization, market development, post-harvest facilities, and storage that we can pump money into,” he said.
Last agenda
The economist-lawmaker said expediting the rollout of the Rice Competitiveness Enhancement Fund (RCEF), improving biosafety in agricultural imports, the implementation of the rice farmers financial assistance program, and commencing a subsidy program for inorganic fertilizers are some key agenda items that the House will immediately work on once legislative session resumes this Monday.
After it resumes session on Monday, the House will adjourn on February 5 in time for the start of the campaign period for nationally-elected positions on February 8.
Salceda said the Congress will also prioritize policy reforms in the final months of the Duterte administration to modernize farms and fisheries, promote sustainable forestry, and lower the costs of feeds and fertilizers.
Salceda added that he is pushing for the inclusion of these areas in the Strategic Investment Priorities Plan (SIPP) which would allow them to qualify for tax incentives under the Corporate Recovery and Tax Incentives for Enterprises or CREATE Act which Salceda principally authored.
“Every breakthrough in human civilization has been marked by radical progress in agriculture. If the Philippine economy will break out to developed status, we will need dramatic progress in our agriculture sector,” Salceda said.
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