CRISIS IS HERE: IMF'S BAQIR SAYS POLICIES MUST FIT COUNTRY NEEDS
MANILA, OCTOBER 25, 2009 (MALAYA) By JIMMY CALAPATI - International Monetary Fund resident representative to the Philippines Reza Baqir yesterday said that the crisis has reached emerging markets.
He said that it is important that each government’s policy reaction must fit specific country needs.
"New attention has to be taken to country specific circumstances. There’s no one size fits all," Baqir said.
He pointed out that each country must pinpoint where it is being hit and address that problem be it liquidity management or bank supervision.
"Where is the shock being transmitted?", he asked.
He said that countries need to prepare in designing appropriate policy response.
After reviewing and it becomes apparent that a sector is exposed and at risk, Baqir said that that is the time to implement whatever reform is needed.
to be implemented to address the problem.
"Whether it is in the area of liquidity management or it may be in other areas of banking supervision," Baqir said, "any policy response that is developed has a better chance of succeeding if it has a keen appreciation of the channels to which the shock is being transmitted," Baqir said.
Baqir said that emerging markets, Philippines included, has led global growth but they need to be prepared.
"The growth projections of Asia for 2008 and 2009 are higher than many other regions. Asia has good momentum going in," Baqir said at the Confederation of Asia-Pacific Chambers of Commerce and Industry Conference.
For the whole emerging Asia, Baqir said that IMF forecasts growth to reach to 7.7 percent for 2008, much higher than other advanced economies.
For the Philippines, growth projections of IMF for 2008 is pegged at 4.4 percent, which is at the lower end of the revised range of the national government’s forecast of 4.4-4.9.
Nevertheless, Baqir said that Asia is also exposed to global economic conditions, and perhaps more so now than before.
Baqir warned that "what is also becoming increasingly apparent is that the crisis has reached the emerging markets."
"Since the global financial system is linked, that implies that problems in the financial system in one part of the world can have implications in other parts of the world," he added.
"The reason is that, as you know, the crisis started from the subprime sector and from the exposure of banks to such assets. In Asia, such direct exposure has been more limited."
"But as I said, banks today are a lot more connected than they were 20 years ago. If you see already there is a particular type of a problem affecting another bank, that is good enough information for you to be prepared," Baqir said.
When asked about the Philippine situation, Baqir hesitated to comment.
"I am happy to comment overall on Asia but not specifically on the Phil.," he said.
Chief News Editor: Sol Jose Vanzi
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