The Philippines recognizes that the stability of the international monetary system rests on each member economy doing its best to ensure its own economic fundamentals are sound and its external position is strong. The Department of Finance and the Central Bank of the Philippines have cooperated well in ensuring fiscal discipline is observed at all times.
Our efforts produced exemplary results. Revenue flows are robust, our international reserves are at a historic high, and our credit rating has been upgraded. Our debt as a percentage of GDP continues its downward trend. We have made substantial progress in reforming our tax system, modernizing our infrastructure, and further liberalizing our economy. The Philippines is also expected to achieve upper middle-income economy status next year, way ahead of schedule.
However, like most other countries, we do find ourselves today amidst much uncertainty. We are concerned over the ultimate consequences of the trade tensions that appear to be escalating between the world’s two largest economies, which raise the prospects for global economic slowdown. We also view with concern the rise of protectionism and negative interest rate policies as well as the increasingly debilitating effects of climate change and profoundly disruptive technologies.
A slowdown in the world’s economic performance will have significant adverse effects on low-income countries and emerging economies. If present trends continue, all the work we have put in preparing our economies for competitive trade, improving our domestic efficiency, and maintaining the highest standards for fiscal discipline will fail to ensure inclusive growth.
Nothing threatens peace and stability more than economic stagnation, especially one inflicted by growing hostility to free trade. We have now reached a critical threshold. Beyond this point, we fear seeing a world thrown into economic decline.
In addition, we also express deep concern over the fact that an estimated 47% of low-income developing countries are at debt distress. Development aid in the world has also dropped by 2.7% in 2018, with bilateral official development assistance (ODA) to least-developed countries falling by 3%. With ODA making up two thirds of external financing for countries who are most in need, we express our unease with how relevant states and institutions are responding to the impending global economic crises. We also feel compelled to state that the objectives of development assistance should not hover around neo-colonialist tendencies. International cooperation is a means toward shared prosperity, not the subjugation of vulnerable economies.
We call on the International Monetary Fund and the World Bank to help emerging countries in mitigating, if not reversing, these factors that threaten prospects for global growth. The interaction between international institutions and national governments with pivotal junctures throughout history must be adaptive and strong-willed.
We fear that the traditional tools we have used to address such issues might prove insufficient, especially in dealing with disruptions in business models brought about by technologies, trade war, and changes in the supply chain models.
We call on the IMF and the World Bank to re-examine the traditional interventions and discard those that no longer work in favor of bold, out-of the box solutions for the institutions to remain in the foreground of the global economic landscape. This should underpin the concept of the “new multilateralism”.
The IMF and World Bank should likewise remain engaged in supporting high-impact reforms to improve domestic resource mobilization of developing countries that will aim to sustain growth, boost long-term growth prospects, and increase resilience to economic shocks. They should also closely collaborate with regional multilateral institutions as they have a more intimate understanding and appreciation of the socio-cultural and economic contexts of the member countries in the region and hence, their development needs.
Institutional reforms must also continue, under their commendable leadership, to promote exemplary practices and efficient coordination in the multilateral system. These are urgent concerns on the table. The role of the IMF and the World Bank in ensuring global economic stability and shared prosperity has never been more important than it is today.
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