ASEAN finance leaders reaffirm commitment to continued fiscal stability

A statement issued after the meeting also reiterated the need for the bloc’s financial processes to address new developments in a systemic way, with solutions that would support economic growth and financial stability for all.

Ry Sochan

Ry Sochan

The Phnom Penh Post


Rath Sovannorak (front right), director-general of Banking Supervision of the National Bank of Cambodia, attended the 10th ASEAN Finance Ministers’ meeting in Indonesia on August 26. PHOTO: NATIONAL BANK OF CAMBODIA/THE PHNOM PENH POST

August 29, 2023

PHNOM PENH – ASEAN finance ministers and central bank governors have reaffirmed their commitment to upholding the bloc’s financial stability and fostering greater financial integration.

They issued a statement following the 10th joint meeting of ASEAN finance ministers and central bank governors, held in Indonesia on August 25. This was the second such meeting during Indonesia’s tenure as ASEAN chair.

Rath Sovannorak, deputy governor of the National Bank of Cambodia (NBC), led an NBC delegation to the conference.

The statement commended Indonesia’s significant progress in its 2023 economic priorities, which focused on four themes: finance and health cooperation, food security, local currency transactions, and regional payment connectivity.

“The meeting further reiterated its commitment to maintaining financial stability and promoting deeper financial integration in ASEAN.

“The meeting looks forward to the completion of the remaining priority economic deliverables before the end of the year,” said the joint statement.

It also reiterated the need for the bloc’s financial processes to address new developments in a systemic way, with solutions that would support economic growth, financial stability and prosperity for all.

They also welcomed the proposals from regional financial bodies that would allow closer cooperation including, but not limited to, financing initiatives in the health and agriculture sectors.

The statement highlighted that despite subdued global economic growth, the region continues to enjoy robust economic growth, which is underpinned by resilient domestic demand and supported by the continued recovery of tourism. It did, however, acknowledge that the global economic outlook remains uncertain.

“ASEAN needs to remain vigilant given the slightly lowered growth outlook of 4.5 per cent in 2023 due to weakening export demand. Inflation is expected to remain high in several ASEAN member states due to elevated input prices, increased demand for services and continued currency pressures,” it said.

It added that the current economic atmosphere underscores the importance of strengthening macroeconomic policy mixes, in order to enable member states to use as many tools as possible to ensure stability.

It also explained how global policy responses to the pandemic and current global economic conditions have left many countries with elevated debt pressures and limited policy spaces. Intensifying geopolitical tensions – as well as slower-than-envisioned policy responses to climate change – may also exacerbate global fragmentation, which could hamper global trade and investment. Food and energy security issues remain critical and require well-coordinated policy actions.

The meeting’s participants recognised the importance of collaboration between finance and health authorities to strengthen regional health capacities, and welcomed the outcome of the joint finance and health ministers meeting, held on 24 August 2023.

They also examined a study on national and regional financial architecture for strengthening post-Covid-19 pandemic prevention, preparedness and response, while acknowledging that the financial sector’s support is crucial to guaranteeing food security.

The statement endorsed a cross-sectoral collaboration under the ASEAN finance process to examine the contribution of the finance sector, and tasked the ASEAN secretariat with supporting the collaboration.

“The meeting welcomed the progress of the digital and technology network of ASEAN cyber-security resilience and information sharing platforms, along with capacity building efforts among members through cybersecurity incident handling simulations,” it added.

The bloc also welcomed the progress of the ASEAN forum on taxation initiatives, noting that improved bilateral tax agreements would help address the issue of double taxation. They encouraged all member states to improve such agreements, in order to improve the regional investment climate.

The statement went on to acknowledge the importance of dialogue that would allow members to anticipate the implementation of global minimum tax, and its impact on tax incentive policy. It also called for increased discussions on crypto asset and carbon taxation, in order to prepare for future challenges.

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