Finance Secretary Benjamin Diokno urged policymakers in the Association of Southeast Asian Nations to remain vigilant amid the risks that threaten the world economy.
Diokno delivered this message during the 10th ASEAN Finance Ministers and Central Bank Governors Meeting on Aug. 25, at Mulia Hotel in Jakarta, Indonesia in response to the global economic updates and risks and shared the Philippines’ strategies before other ASEAN member states.
The AFMGM, chaired by Indonesian Finance Minister Sri Mulyani Indrawati and Bank of Indonesia Governor Perry Warjiyo, gathered ministers and governors for discourse on global and regional outlook and development challenges.
“While the ASEAN economies continue to be a major engine of global economic growth, policymakers must remain vigilant of multiple external risks faced by the world economy,” Diokno said.
“These include rising geopolitical tensions, monetary policy tightening, elevated domestic inflation and climate change,” Diokno said.
The International Monetary Fund, World Bank and Financial Stability Board presented the global economic outlook, challenges ahead and how Asia and ASEAN were projected to fare against ongoing risks.
The IMF said while global potential growth was expected to remain low, Asia would continue to drive half of global growth. The WB supported this view, saying the ASEAN’s long-term growth potential remained relatively good and could be boosted with labor reforms, investment in energy transition and stronger trade.
Diokno said ASEAN member states should adopt sustained investments in infrastructure and social programs; measures to address high inflation; diversification of external markets; enforcement of measures supporting labor and employment; and provision of affordable lines of credit for micro, small and medium enterprises, fisherfolk, farmers and local entrepreneurs to mitigate the impacts of global challenges.
He also underscored the importance of maintaining solidarity between ASEAN member states through collaborative efforts, such as strengthening the region’s surveillance activities, cooperating on macroeconomic policies and enhancing regional financial safety nets.
Diokno, on promoting transition finance, welcomed the ASEAN Infrastructure Fund’s repositioning as an ASEAN green fund in line with the region’s commitment to promoting environmental sustainability and climate change mitigation and adaptation in the region.
The AIF will commit a higher percentage of its portfolio to green projects––around 35 percent to 40 percent by 2026 and about 60 to 70 percent by 2030.
“We support the proposal to align the AIF with the ASEAN Taxonomy for Sustainable Finance and to increase the potential of the ASEAN Catalytic Green Finance Facility in attracting foreign investors,” he said.
The ACGF is an AIF initiative that supports governments in preparing and financing infrastructure projects that promote environmental sustainability by combining AIF resources with financing from donors and development partners through co-financing agreements and technical assistance.