Asia's central banks are taking a far more co-ordinated approach to shield their economies from any new global economic crisis and are unlikely to turn to the IMF for help in the short term, the governor of the Philippines central bank said on Saturday.
"We have facilities that can be tapped in case of BOP (balance of payment) problems," head of the Bangko Sentral ng Pilipinas, Amando Tetangco, told Reuters in an email in response to questions about his response to this week's EU summit to try to deal with the eurozone crisis.
European leaders secured an agreement to draft a new treaty for deeper economic integration in the eurozone on Friday, but Britain refused to join the other 26 countries in a fiscal union and was left isolated. "We are also lending support to refinements in the IMF borrowing facilities. We don't forsee that we will be needing these in the near term, but it is added assurance should the need arise."
Several Asian countries were forced to turn to the IMF in the 1997/98 Asia financial crisis, a move that came with tough conditions for governments and which still rankles in the region. Mounting concern about the eurozone's festering debt crisis and the US economic weakness mean Philippine authorities must boost domestic demand by increasing government spending, Tetangco said.
"If we are to continue to be shielded, government needs to spend more on employment-generating projects and the large-value infrastructure that are needed as base for sustainable long-term growth." Tetangco said the central bank was closely monitoring the developments abroad to ensure that monetary policy remained supportive of economic growth.
On Tuesday, Tetangco said the central bank was willing to ease monetary policy early next year if the outlook for growth worsened. Some analysts were betting on cuts of as much as 50 basis points in interest rates in the first half of 2012 as moderating inflation pressures give authorities the leeway to focus on boosting growth, which has lost significant momentum this year.
Annual GDP growth unexpectedly slowed in the September quarter on weak exports and state spending, raising doubts the 2011 growth target of 4.5 to 5.5 percent would be achieved. The central bank held interest rates at 4.5 percent at its December 1 policy review, saying it needed to see a continuous moderation in inflation before it considered reducing rates.