ESCAP 2009: Triple crises in the region

Dennis Arroyo, NEDA director for national planning and policy, presents the Philippine perspective
The UN Economic and Social Commission for Asia and the Pacific has come out with the 2009 Escap survey, which warned governments that three, not just one, crises threaten the region.
“While most governments are focused on dealing with the worst economic crisis in many decades, two other longer term crises should not be forgotten. Food-fuel price volatility and climate change are converging with the present economic crisis to create what is now being referred to as the triple threat. With almost two thirds of the world’s poor and half of its natural disasters, Asia and the Pacific is at the epicentre of the triple crises,” Escap said in a press statement. (Click here for the report).
Former National Treasurer Leonor Briones however points out that is now also the time for people to make sure that the money spent on stimulus programs do go to the people who need them most. Briones pointed out that just because money has been allocated does not always mean it is released.
In the 2008 budget, Briones said P100 million was alloted for public hospitals, for disinfection measures. It has not been released until now, she said, as well as the P400 million alloted for tuberculosis programs.
Former National Treasurer Leonor Briones says: READ THE PRESIDENT'S VETO MESSAGE.
Here are my notes on the press conference. I didn’t have the time to go through these, so just read through them but verify with the speakers or other people first before using them.

Vanessa tobin: this year’s theme…addressing triple threats…as we gather here in times of grim conditions, 2009 is a make or break year…with six years remaining in race to reach mdg for 2015, we’ve made some progress but within rp we continue to lag behind in eradicating extreme poverty…mdg 2, mdg 5. And we do now also need to ensure that mdg 6 remains within reach…devt progress so far achieved threatened by convergence of these 3 global threats…survey supplements other reports such as that of adb, wb, imf and highlights most critical issues and risks our region faces today…entering current devt paradigm towards more inclusive and sustainable devt path…continue to be an active partner…particulary to poorest and most vulnerable sectors…fully acknowledge and commend inclusive approach taken in formulation of survey..magnificent partnership…the survey also widely shared and simultaneously released in other key areas in region…

Amy wong: food and fuel volatility and climate change. Compounding
impact made it more difficult to address persistent issues…ways in which econs in region can move forward from…highlights challenge to turn crisis into opportunity, address policy gaps, and come up with comprehensive responses…

Triple threats:
Global financial crisis
Food and fuel volatility
Climate change

These three threaten economic devt of asian pacific region…between jan and jul 2008, oil prices soared…in the absence of long term demand and supply balance in market…episodes could recur…

Asia pacific region shown resilience…foreign exchange reserve filled…econs in asia pacific much better protected in 1997 from risk of financial contagion. Dramatic drop in export impacted the
region’s…growth among developing econs forecast to slow down to 6% in 2009 as compared to %5 in 2008. If downside risk happens, forecast growth for region below 3*

In face of financial crisis, many econs in region have introduced various forms of fiscal package. Promote regional trade finance mechanism as self-help mechanism. Prioritize investments aimed that reducing cargo enemy and…food prices.

Strengthen social foundation for inclusive development. Strong coordinate regional response…

Dennis arroyo: We speak of 3 threats…easy credit, rising house prices, fancy finance instruments and innovative risk management techniques which encouraged…and household debt. The crisis moved towards real sector…danger of moving back towards financial.

Region is resilient, still have exposure to capital flows. Compared to 2001, foreign portfolio investments decreased substantially…korea’s most vulnerable with high portfolio investments…china is least vulnerable. Phils…foreign exchange reserves four times level of what we had compared to asian crisis…developing country dependence on us and eu markets has increased overall. Asia phenomenon…made in asia, consumed in us. Countries most linked to production markets are experiencing the slowdown…what matters is not exports per se but imports…less vulnerable to swings…

Outlook for asia has darkened much but some economies are more resilient. India, Indonesia, china, phils…there’s room for expansionary fiscal policies…largest in us…but as percent of gdp largest is china…they have room for expansionary fiscal policy.

55% of gdp – rp debt. But japan is 170% of gdp. And I thought we had problems. The growth among developing nations in escap forecast to slowdown to 3.6% in 09 from 5.8% but more pessimistic scenario…2.7% in region. There is variation in the growth. More growth under developing escap econs…but negative growth for developed escap econs. They’re the ones who will be more impacted. The more export oriented econs will be the most affected. Rp, still looking at 3.7% to 4.4% gdp growth for 09 until further notice.

Size matters in public spending, that’s why it should be commensurate to size of crisis. We have need for speed in spending, that’s why we’re stressing fast spending on small scale infrastructure.
Classrooms, farm to market roads, for job creation. You need spending to stimulate confidence.

From fire fighting to building resistance…there are many proposed but few decisions being made. And no country can do it alone. Attention turns to building coordinated efforts, need combined work within escap. Chiang mai initiative and others. For asia pacific countries, we propose… because asia pacific is highly integrated, actions must be global in nature. We must have multilateral policies, because of boom and boost, need for sound regulatoin. Accountability should form centerpiece of reform. Whilie principles of financial infra clear…we need a reform of global finance archicture. There’s now need for asia pacific countries to engage in regional macro economic participation. Think of establishing coordinated and durable regional currency mechanisms. Uncoordinated could lead to beggar thy neighbor policies. Newly agreed asean membership pool…size and uses should be widened. No regional institution for export credit and export credit guarantees.
Once world resumes, you’ll have resumption of food and price shocks. Resume in medium run once global economic recovers. In hindsight, symptoms of turbulence in financial market. More coordinated than previously thought. The ones most affected were rural households with no land and female headed households most impacted with crisis.

Recommendations: fiscal reforms..investments across supply chain, focus on smallholder agri… to cut gaps in yields across countries and regions That’s why rp now trying to wire all public schools. Social protection must not be crisis driven but designed as a way of creating resilient and inclusive societies.

Govts must look beyond national interests…position of asia pacific in global economic compels it to play in dual role…let’s not be dictated upon by the developed countries, pressure them to do more to rein in greenhouse gases. Countries in region can promote regional cooperation…way forward is asia pacific framework for inclusive and sustainable growth…entry of gov’t offers opportunity to frame…three pillar framework. Resuming economic growth, preserving macro economic stability, strengthening social foundaiton for inclusive devt, promoting sustainable devt. Regional consultative process, flexibility, copmrehensiveness, sufficient details…fell most for manufacturers and exporterss and less for commodity importers. Inflation was key concern in southeast asia towards middle of 08.

Briones: report helps us locate ourselves in region as a whole.
Numbers show us how to look at these things in an objective manner. We are constantly tracking not only economic devts but social devts also. We should have different versions of this, for the fiscal policy making bodies…we should information to relevant committees in congress…many of recommendations have very strong fiscal policy implications. We can see what the trends are; this book gives us numbers and figures and tells us what is happening in the provinces. We like to think most of action in metro manila but real devt, undertakings in reduction of poverty, attainment of mdg goals are being undertaken in regions and this kind of info is useful so they
can also locate themselves in relation to entire country.

In the phils, 3 lang ba ang crisis natin? We might be tackling, quadruple, sixtuple crisis…not only fiscal, financial…return of gov’t to economic, since when has gov’t left economic? Since people in gov’t are linked to private sector. Exec is in private sector, big business in congress…very sound advice about enhancing and reforming role of gov’t…we in phil has another crisis and that is the governance crisis…we all know the crisis of massive graft and corruption, loss of faith in our political as well as gov’t leaders, crisis of cynicism, accepting it’s part of the game, in gov’t corrupt, in legislation, stupid…weakening kind of cynicism…before we talk about gov’t managing this economy society, we have to face crisis of governance.
Related…our potential political crisis. We are talking about a financial, food and fuel crisis, what are they debating about in legislature? Chacha? What is being discussed in executive side? There might be a potential political crisis because we are so concerned right now about charter change we have a social devt crisis. All of these…what is the impact on rp and crisis in asia and pacific? Increased levels of poverty…we talked about financial crisis starting in 2008 but we know as early 06 or earlier, malnutrition and poverty rates were already rising. Highest rates of maternal and infant mortality even before this global thing. In rp, global thing is financial, food and fuel and climate but even before that we had our own crisis…which exacerbates..which is why though numbers are comforting…we cannot compare japan and phils, capacity to adjust, size of economic, capacity to respond to crisis affected by fact that we had other crisis as well and that started even before the financial crisis. And overarching this is we have a moral crisis. Where it is perfectly acceptable to accept bribes, use public funds for private purposes. We are so engrossed not with crisis but with 2010. That is what we have to accept.

From substantive point of view agree with all recommendations especially call on regional action and coordination we have to go beyond preoccupation beyond navels. But how can we play role in regional coordination when our house has to be fixed and put together? This is very important theoretically.

On issue of governance, one challenge is matter of accountability. We don’t hear about…terribly terribly scared because there is no disagreement…that gov’t has to expand level of spending must take risk of increasing level of deficit…immediate need is jobs to take care of poverty and protecting our people but risk of accountability is there. P3ob economic stimulus fund that bears close watching…where will it be going? We have to be very careful about this. There is also warning that while you are encouraged…this time size matters but perhaps also prudence and care matter becc how is expanded level of expenditures going to be financed? Clearly by borrowing latest estimates is 177b (deficit)…we have to take into consideration that backdrop of this is push for 2010 and itt will be very very tempting to use a huge stimulus package not so much to pursue economic and social objectives but to pursue political objectives. Veto messsage of pres: house and senate reduced allocation for debt service by P50b and put in add’l expenditures for education and health. When this reached the president…the president made a direct veto on p50b reduction of debt service but did not veto the P50b addition to expenditures. You have possibility of much higher levels of expenditures. Imposed a conditional veto that all additions that congressmen most of proposals of alternative budget initiative of social watch included in p50b imposed by congress. Relase of these funds have to undergo presidential approval even if there is already appropriation. Already talking about…going to have huge p1.4t budget…look at 2008 budget. 1.3t budget and not all released. P100m for auto claims…for disinfecting hospital equipment…lot of healthy people go to public health facilities for treatment and die…P100m in 08 budget not released, need for political clearance. Rp no.6 in prevalence of tb…P400m for treatment of tb still not released, 08 budget. Even if you have 1.4t budget, no assurance it will be released unless there is political clearance. We have to read veto message very carefully.
Entire gaa not yet released to public and veto message gives signal. gov’t has to come in, manage crisis, has to be responsible gov’t, for the poor, those who cannot protect themselves. For more than 50% of population who are according to sws already missing meals as of dec 08.

In the phils, civil society very active. And social watch does its part. We are very active in matter of fiscal policy…we have presented alternative budget. Not enough to increase allocations for social devt…not enough to see there are lines in appropriation lines providing for school houses but see to it that monies are released and if released, going to projects they are intended for. Social watch will present budget tracking report on certain expenditures. We are here less than 50 people…this has to get out.. Has to reach not only us here in this hotel room but those who are in position to move, and to bring about changes. if you are able to do this, perhaps all the expenditures, hard work, competence poured into this report will not have been in vain.
We have governance crisis linked to very dangerous political devt…poverty is rising…we have to watch gov’t because gov’t has never left. Especially since they are using the correct view that we really have to expand levels of expenditures. How fiscal policy is being implemented. Not only measure what is happening by graphs and charts, numbers, but look at these in tems of what is happening to man in street, in terms of reducing levels of hunger, kidnapping, which we have to recognize.

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