The Philippines’ central bank pushed for additional changes to the way it controls the money supply in an effort to better combat inflation and support economic growth.
After consumer prices in the country increased at the quickest rate in more than a decade in January. Here is what was completed:
After widening the list of shorter instruments it is releasing in June and starting to accept all bids for its overnight reverse repurchase facility.
One of its primary policy tools, the Bangko Sentral ng Pilipinas will this week announce more adjustments to its monetary operations.
The BSP has been striving to develop a market-determined interbank overnight rate, according to Governor Eli Remolona, who assumed office on July 3.
The projects aim to improve its monetary instruments and increase its capacity to control short-term interest rates, which in turn affect longer-term rates and economic activity.
Philippines Is Refining Its Tools
The Philippines’ then-president-elect, Ferdinand Marcos Jr., made an unusual decision in late June when he named himself agriculture secretary and in charge of the nation’s food policy. Due to shortages and high fuel prices.
The Philippines is experiencing astronomical food inflation, like many other nations do as well. Marcos won’t have any more options, though, if he takes the helm himself.
Particularly in contrast to nations like India, Thailand, and Vietnam, his short-term policy options are extremely constrained.
Due to its reliance on imported food to feed its growing population, the Philippines is the most food-insecure nation in emerging.
Asia, and Marcos’ appointment as president is a worrying sign for his nation’s ability to provide for its own food needs in the face of an impending crisis.
Asian economies have used a variety of tactics.
Such as food nationalism, subsidies, and price restrictions, to combat the increasing tide of food prices around the world.
From Indonesia’s ban on the sale of palm oil to India’s ban Philippines Is Refining Its Tools on the shipment of refined sugar. The nation with the most active policy thus far is India.
In addition to restricting the export of wheat and refined sugar, it also slashed fuel excise taxes, subsidised fertiliser, and raised lending rates.
And it’s clear why. Food and beverage consumption as a percentage of total household spending in India is 46%.
Adding fuel results in a startling 53 percent increase. Furthermore, because a large portion of the workforce is located in rural areas.
The government must support livelihoods in addition to fighting food inflation to protect household purchasing power because rising prices are eroding business margins.
Yet, Thailand and the Philippines also have significant household weights for food and beverages in the basket of the consumer price index, so India is not alone in this.
As a result, Asia has been actively combating inflation, especially in the more developed nations.
Table 1 lists the strategies used by rising Asia to combat inflation. With India putting almost all of the emphasis on monetary and fiscal policy as well as market interventions.
Thailand has largely imposed price controls and fiscal subsidies, while Indonesia and Malaysia have heavily prioritised.
Fuel subsidies and agricultural export controls (palm oil for Indonesia and chickens for Malaysia). On almost every front, the Philippines has been conspicuously silent.
One important factor is that it has fewer possibilities Philippines Is Refining Its Tools compared to the Asian nations that are net food exporters.
The region’s highest food trade deficit, amounting to around -2% of GDP. During the last three years, is in the Philippines.
When the fuel trade deficit is included, the figure decreases to -5% of GDP. This indicates that the Philippines lacks resources, such as effective protectionism.
Philippines Is Refining Its Tools
To get it through this crisis because it depends on imports. From countries like India and others for necessities like rice.
Instead, it suffers from the food nationalism of other nations. It is most seriously affected by shortages and price increases from the global supply crunch.
Thailand has the highest trade surplus at the other end of Philippines Is Refining Its Toolsthe spectrum. 4% of GDP, followed by Vietnam and, to a much lesser extent, India.
This enables these nations to practise food protectionism if they so desire. A major concern is rice. The top three international exporters are, respectively.
India, Thailand, and Vietnam; any protectionism by these market participants will have a negative effect on the Philippines.