Currency framework needed from G20 -- RPA CURRENCY framework that will allow for coordinated action on capital flows should be agreed upon during this week’s G20 summit in Seoul, South Korea, Philippine officials yesterday said.
"A framework... where there will be closer cooperation among countries in settling imbalances [is needed] ... and I think it will be discussed in the G20 meeting," Finance Secretary Cesar V. Purisima said in a briefing. "This framework should be in effect by early next year. There should be a clearer path early next year," Mr. Purisima added. In Malacañang, President Benigno S. C. Aquino III said the matter was also raised during a courtesy call yesterday by International Monetary Fund (IMF) Deputy Managing Director Naoyuki Shinohara. "We discussed the possibility that the G20 will produce [the framework]. It seems it’s not ready yet," Mr. Aquino told reporters. "Hopefully it will further be expounded at the APEC (Asia Pacific Economic Cooperation) and APEC will hopefully, best case scenario, propose that framework to be adopted." Mr. Shinohara did not hold a briefing but IMF country representative Dennis P. Botman, asked to comment on Mr. Aquino’s statements, told BusinessWorld : "Projected growth in emerging markets is significantly higher than in advanced economies. This has led to large, and at times volatile, capital flows to Asia and other regions complicating macroeconomic management." "Strong global cooperation remains key in this regard to make progress on two critical rebalancing acts: internal (from the public to the private sector) and external (from surplus to deficit countries)," he said in an e-mail. Leaders of the G20 -- which groups the world’s top 20 economies -- are meeting in Seoul from Nov. 11-12. Leaders of 21-member APEC -- which accounts for over half of world GDP -- will be meeting from Nov. 13-14 in Yokohama, Japan with Mr. Aquino attending. "The idea basically is, let us learn from the lessons of the Great Depression [of the 1930s]," the president said. Strong capital flows to emerging economies -- due to continued weakness in the developed world -- have led to currency gains and weakened exports, raising concerns among monetary authorities. Last week’s US Federal Reserve move to buy $600 billion of government bonds is expected to boost those flows. The peso, which closed at P43.245 yesterday, down 54 centavos from Friday, has gained some 8% this year. It hit a 29-month high of P42.53 last Thursday. Mr. Aquino said "rapid fluctuation" was "not yet happening in our country and hopefully it will not happen." "I think we’re roughly in the band that is tolerable within the system. The issue has more to deal with volatility, the rapid swings in either direction. That is what you would want to mitigate..." Ricky A. Carandang, Presidential Communications Development and Strategic Planning secretary, said the government was continuing to monitor the movement of the peso. Mr. Purisima, who attended last week’s APEC finance ministers meeting in Japan, said the currency framework should be drafted by large economies as "with their every move now we are hurting." APEC finance ministers on Saturday committed to refrain from competitive devaluations and move to more market-determined exchange rates. LRT, MRT fares to increase in December COMMUTERS using Metro Manila’s three rapid transit railways will have to deal with higher fares next month, a Transportation department official yesterday said. Increases at the Light Rail Transit lines one (LRT-1) and two (LRT-2) and the Metro Rail Transit 3 (MRT-3) are still being finalized but the minimum fare will not rise beyond P30, Transportation Undersecretary Dante M. Velasco said. "We will have the increase in December. We are not sure whether it will be implemented days before or after Christmas," he toldBusinessWorld. Transportation department and Light Rail Transit Authority officials are scheduled to meet next week and a fare matrix could be finalized before the end of the month. Public consultations would then be held although the adjustments could be implemented earlier. "We may have the fare hike while conducting public consultations. If we see any valid concern not to continue ... we will do necessary actions," he said. "We really need to raise the fares. The money that the government will save can be used for other, more important projects that will benefit more people" Mr. Velasco said a fare increase would allow the government -- which subsidizes the light railways -- to save much as P2 billion every year. "This year, the government expects to spend P6 billion to subsidize MRT operations. Next year, this figure is expected to increase to P7 billion," he said. End-to-end travel on the MRT-3 that traverses EDSA -- from the North Ave. station in Quezon City to the Taft Ave. station in Pasay City -- currently costs P15. Mr. Velasco said the fare would be P48 if the subsidy was removed. The maximum fare at the LRT-1, which now runs from the Baclaran station in Pasay City to Roosevelt station in Bago Bantay, Quezon City, is P20. The Roosevelt end was opened recently as part of a plan to link the LRT and MRT lines. At the LRT-2 line, which runs from the Santolan station in Barangka, Marikina, to Recto station in Santa Cruz, Manila, the maximum fare currently stands at P15.
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