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Salceda: Stronger agriculture is key to resurgent Philippine economy as IMF warns against “economic turbulence” in emerging economies

January 15th, 2022

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) said that strong growth and investment in the agriculture sector will be key to ensuring that the Philippine economy sustains high economic growth levels this year, as the International Monetary Fund (IMF) warned this week that emerging economies such as the Philippines could face “economic turbulence” following developments in US monetary policy and the surge in COVID-19 Omicron variant cases.

In a post titled “Emerging Economies Must Prepare for Fed Tightening,” IMF economists Stephan Danninger, Kenneth Kang and Helene Poirson said policymakers may need to react by pulling multiple policy levers depending on the actions of the US Fed, as well as challenges in their respective countries.

“While the global recovery is projected to continue this year and next, risks to growth remain elevated by the stubbornly resurgent pandemic. Given the risk that this could coincide with faster Fed tightening, emerging economies should prepare for potential bouts of economic turbulence,” the IMF warned.

Ph defenses depend on agriculture

“We have several defenses against a bad tide. We can keep our monetary policy easy with low interest rates. We can continue our massive investments in infrastructure and other public spending programs. We can continue to encourage investments in the Philippines. But, all of that has something to do with agriculture, especially food prices,” Salceda said.

Salceda explained that the strength of the agricultural sector will determine general inflation and wage pressures.

“If prices are high, real economic growth will slow down. If food prices are high, the pressure to increase wages will also be stronger, resulting in a labor market that is not as competitive for investors. Agricultural output will really be important,” Salceda said.

Salceda adds that “if food prices are good during this year, we can also keep our interest rates low, because there will be far less pressure to rein in inflation.”

Salceda also said that “agriculture is one sector where there is plenty of under-investment. We are coming from a very low base, as we lag most of our neighbors in nearly every major crop. There are also investment gaps in mechanization, market development, post-harvest facilities, and storage that we can pump money into.”

Salceda says expediting the rollout of the Rice Competitiveness Enhancement Fund (RCEF), improving biosafety in agricultural imports, the implementation of the rice farmers financial assistance program, and commencing a subsidy program for inorganic fertilizers are some key agenda items that the House economic recovery co-chair says he will immediately work on once legislative session resumes this week.

Policy reforms to modernize farms and fisheries, promote sustainable forestry, and lower the costs of feeds and fertilizers, are also key areas for reforms that the House tax chair says he hopes to work on in the final months of the Duterte administration.

Salceda also said that he is pushing for the inclusion of these areas in the Strategic Investment Priorities Plan (SIPP) which would allow them to qualify for tax incentives under the Corporate Recovery and Tax Incentives for Enterprises or CREATE Act which Salceda principally authored.

“Every breakthrough in human civilization has been marked by radical progress in agriculture. If the Philippine economy will breakout to developed status, we will need dramatic progress in our agriculture sector,” Salceda remarked. #

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