Finance Secretary Benjamin Diokno demonstrated the importance of adopting the right policy tools and committing to global cooperation in times of crisis during the 16th Asian Financial Forum (AFF) Global Economic Outlook Plenary Session, which was jointly organized by the Hong Kong Special Administrative Region Government and the Hong Kong Trade Development Council on January 11, 2023 at the Hong Kong Convention and Exhibition Centre (HKCEC).
“[T]he growth and price stability objectives of any government can be achieved if the leaders and policymakers are able and willing to adopt the appropriate monetary and fiscal policies. There is much we can accomplish with the right policy tools, decisive action, and commitment to global cooperation,” said Secretary Diokno.
The AFF is Asia’s premier platform for global leaders in government, finance, and business to discuss and exchange insights on the global economy from an Asian Perspective.
Her Excellency Yuriko Backes (Minister of Finance, Ministry of Finance of the Grand Duchy of Luxembourg), Dr. Zamir Iqbal (Vice President Finance and CFO, Islamic Development Bank Jeddah Kingdom of Saudi Arabia), Mr. Jin Liqun (President and Chair, Asian Infrastructure Investment Bank), Mr. Jean-Paul Servais (Chairman of the International Organization of Securities Commissions (IOSCO); Chairman of the Financial Services and Markets Authority of Belgium); Mr. Arkhom Termpittayapaisith (Minister of Finance, Thailand), Dr. Tao Zhang (Chief Representative, Representative Office for Asia and the Pacific Bank for International Settlements), and Ms. Teresa Kho (Director General of the East Asia Department, Asian Development Bank) each spoke on the topic of global cooperation alongside Secretary Diokno during the plenary session moderated by Mr. Christopher Hui Ching-yu, GBS, JP (Secretary for Financial Services and the Treasury, The Hong Kong SAR of the People’s Republic of China).
In his remarks, Secretary Diokno recounted the many crises he has encountered over the years, saying, “I’ve seen when the Philippine economy shrunk by 7 percent for two consecutive years in the mid-80s; when the gross international reserves was down to two [weeks’] worth of imports; when the debt-to-GDP ratio was more than 100 percent; when the peso depreciated precipitously as a result of the Asian financial crisis. The banks’ non-performing loan ratios were high and unsustainable.”
Despite these challenges, the Philippines was able to weather through each one with the help of much-needed structural reforms that were introduced by one administration to the next.
“But we did recover. [T]he Philippine economy steadily grew at an average rate of about 6 percent. Before the pandemic, the debt-to-GDP ratio was less than 40 percent. The fiscal deficit was around 3 percent of GDP. The banks were sound and well capitalized. All these reforms made the Philippine economy resilient to crises,” he added.
When the Philippine economy shrunk by more than 9 percent at the height of the pandemic, the government decisively intensified its measures by amending the Foreign Investments Act (FIA), the Retail Trade Liberalization Act (RTLA), and the Public Service Act (PSA) to relax foreign investment restrictions and further open the Philippines to the global economy.
In light of global challenges, Secretary Diokno also emphasized the need for cooperation between countries to address the impending climate disaster.
“A concerted global action supported by a well-funded and strong international organization, like a revitalized United Nations, is needed. Each country may individually pursue a robust, inclusive, and green growth. Collectively, it might help approximate the ideal solution,” Secretary Diokno said.