Albay Rep. Joey Sarte Salceda, a noted economist, said investments and growth in agriculture will be keys to ensuring that the country sustains its high economic growth levels this year, even as the International Monetary Fund (IMF) has forecasted an “economic turbulence” among emerging economies like the Philippines, caused by developments in US monetary policy and the COVID-19 Omicron surge.
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.
Reacting to the IMF forecast, Salceda who chairs the House Ways and Means Committee, said the Philippines should invest more on agriculture, since the strength of this sector will determine general inflation and wage pressures.
“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 explained.
“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 stressed.
“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,” he added.
Salceda pointed out that “agriculture is one sector where there is plenty of under-investments. We are coming from a very low base, as we lag behind 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.”
He said expediting the rollout of the Rice Competitiveness Enhancement Fund (RCEF), improving biosafety in agricultural imports, implementation of the rice farmers financial assistance program, and commencing a subsidy program for organic fertilizers are some key agenda items the House will immediately work on once legislative session resumes this week.
The lawmaker said policy reforms to modernize farms and fisheries, promote sustainable forestry, and lower the costs of fertilizers and feeds are also key areas for reforms he hopes to work on in the final months of the Duterte administration.
Salceda said he will also push 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 he principally authored.
“Every breakthrough in human civilization has been marked by radical progress in agriculture. If the Philippine economy will strive to breakout into a developed status, we will need dramatic progress in our agriculture sector,” Salceda remarked.