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IMF calls on ASEAN to team up on joint economic recovery

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National Bank of Cambodia governor Chea Chanto attends the IMF-State Bank of Vietnam High-Level Conference held on Tuesday. NBC

IMF calls on ASEAN to team up on joint economic recovery

International Monetary Fund (IMF) managing director Kristalina Georgieva called on all ASEAN leaders to join hands in the battle against Covid-19 and ensure a quick economic recovery.

She said this at the joint IMF-State Bank of Vietnam High-Level Conference held on Tuesday via video link under the theme Securing Growth and Resilience in the ASEAN: Policies for the Post-COVID World.

The event was also attended by National Bank of Cambodia (NBC) governor Chea Chanto, Vietnamese Deputy Prime Minister Pham Binh Minh, State Bank of Vietnam deputy governor Nguyen Thi Hong, Indonesian Minister of Finance Sri Mulyani Indrawati and governors of other ASEAN central banks.

Georgieva said: “For years, the world has admired the spirit of cooperation that defines the ASEAN way. ASEAN’s embrace of openness and learning from one another over the years helped create thriving middle classes and raise living standards for millions of people.

“Last year, the 10 ASEAN countries contributed 10 per cent of global growth – just as much as the 19 countries in the Eurozone.

“Unless we act decisively, unless we act together, there could be long-lasting scarring from this pandemic. We also recognise that we are faced with other shocks, especially caused by a climate crisis.

“It breaks my heart to see the terrible impact of recent flooding on Vietnam, Cambodia and the Lao PDR. Building resilience of people and economies to shocks is a pressing imperative.

The NBC said Cambodia and ASEAN have rolled out a steady stream of measures in response to the pandemic, including fiscal policy, stimulus packages and “cautious” macroeconomic policy.

These, it said, aim to enhance the livelihood security of the low-income and vulnerable populations and underpin socio-economic activities.

“The Covid-19 pandemic is an emergency like no other. No one country can avoid the impact of the health crisis and its severe impact on the economy, and uncertainty from the spread of the coronavirus remains a threat.

“To unreservedly ensure the efficiency of the policies, all issued measures must have a specific and targeted focus and implemented at suitable times to avoid moral dilemmas and unforeseen consequences.

“When the health crisis ends, policymakers have to prioritise the most severely affected sectors. It is vital that the government allocate resources in an efficient manner that would best push up new growth, solve structural issues and build market confidence to enhance private sector investment,” the NBC said.

According to Georgieva, in the Asia-Pacific region overall, the IMF projects a 2.2 per cent contraction this year and a return to 6.9 per cent growth next year, revised upwards from June.

These figures match the IMF’s latest Regional Economic Outlook, released on October 21.

On October 13, the IMF projected a 2.8 per cent contraction in the Cambodian economy this year, and a sharp rebound next year to 6.8 per cent growth.

Georgieva said: “Going forward, it will be critical for countries within their parameters and capacity to maintain crucial fiscal and monetary measures, and importantly, to continue to target those measures in a way that helps the most vulnerable people, the most vulnerable parts of the economy.”

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