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Asian economies should make a priority the immediate implementation
of measures to contain high inflation, instead of setting up a
foreign-reserve pool, the US-based credit rating firm Moody’s
Investors Service said.
Member-countries of the Association of Southeast
Asian Nations (Asean) are in talks for an $80-billion
foreign-reserve pool with China, Japan, and South Korea, with the
three larger Asian economies expected to make bigger contributions.
Asean groups the Philippines with Brunei
Darrusalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore,
Thailand, and Vietnam.
The multibillion fund aims to prevent future
currency turmoils, with any Asean member-countries at risk of
financial crisis allowed to access funds from the reserve pool
without seeking assistance from organizations such as the
International Monetary Fund.
The scheme would replace existing arrangements
that involve bilateral currency swaps.
Difficult task
According to Moody’s economist Sherman Chan,
details regarding the use of the foreign-reserve fund will be
difficult to work out.
In a Moody’s report released recently, Chan
said talks among the Asean member-countries to put up a
foreign-reserve pool will take long. But, he added, the more
pressing problem over the short term that needs to be addressed is
inflation across the region.
“If Asean [member-countries] are keen to
strengthen cooperation, a higher priority on their agenda might be
to contain food price inflation caused by soaring grain prices,”
Chan said.
The Philippines, the world’s largest rice
importer, recently canceled a tender to buy rice due to poor
response from suppliers.
As a result, it has called for an emergency
meeting with its Asean peers and larger Asian nations to address the
reported food shortage in the region.
In recent months, several nations restricted
exports of food staples over concerns with shortage in domestic
supply and high prices.
Thailand, the largest rice exporter in the
world, though, said it will not ban rice exports. It has backed off
from a proposed Asian rice cartel with Cambodia, Laos, Myanmar, and
Vietnam.
Moodys said Thailand’s pledge to entertain
importers could lead to higher global grain prices.
In the Philippines, inflation, or the increase
of prices of goods and services, in April rose at its fastest pace
in three years, because of costlier food, including rice, and
electricity.
The National Statistics Office said the
inflation rate rose 8.3 percent in April, from 6.4 percent in March.
This rate exceeded the estimates of the Bangko
Sentral ng Pilipinas of 6.4 percent and 7 percent.
The Bangko Sentral ng Pilipinas, however, said
price movements are likely to return to “manageable levels” as a
result of expected higher food production.
Food expenses
Inflation in the Philippines, according to the
latest survey conducted by the think tank IBON Foundation, has seen
families of three of four Filipinos, or 75.3 percent, having
difficulties in buying enough food. The survey also found that the
families of almost seven of 10, or 69.7 percent, have problems
paying for their electricity and water bills.
“More Filipinos have trouble buying enough
food and paying for basic expenses,” the IBON survey said. It
noted that only around 63.2 percent said they had a problem in
buying enough food in January.
The government on Tuesday said surging food and
energy prices in the country pushed the inflation rate in April to
8.3 percent, the highest level in three years.
The April 2008 inflation figure was the highest
recorded since May 2005, when inflation hit 8.5 percent.
The IBON survey also showed that 67.42 percent
of respondents have difficulty paying for transportation costs,
compared to only 60.6 percent in January.
At present, the survey said, 73.4 percent have a
problem buying their medicines or paying for their medical
treatment, and that 68.2 percent have trouble paying for their
children’s tuition.
It added that almost six of 10 Filipinos, or
58.6 percent, agree with proposals to restore government regulation
of the local oil industry and to repeal the Oil Deregulation Act, or
Republic Act 8479.
The deregulation act, which was implemented in
1998, removed government control over the downstream oil industry.
The nationwide survey was conducted from April 7
to April 16 with 1,495 respondents from various sectors, using a
multi-stage probability sampling scheme with a margin of error of
plus or minus 3 percent.
-- Maricel E. Burgonio and Rommel C. Lontayao
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