Sustainable, Inclusive Growth in APEC Economies Within Reach
APEC SFOM Wraps Up with Broad-based Support on Cebu Action Plan
12 June 2015 Bagac, Bataan—The Asia Pacific Economic Cooperation (APEC) Senior Finance Officials’ Meeting (SFOM) closes with a firmer Cebu Action Plan (CAP) today on the back of broad-based support from economies across the region on the CAP’s 4 pillars: financial integration, fiscal transparency and reforms, financial resiliency, and infrastructure development and financing.
Senior finance officials from across the Asia Pacific refined the CAP throughout the 2-day meeting, drawing on insights provided by international financial institutions on the global economic outlook. With the second and last day of the SFOM covering financial resiliency and infrastructure development and financing, APEC economies found each pillar of the CAP attuned to areas that need to be addressed in order to achieve sustainable, inclusive growth.
Finance Secretary Cesar V. Purisima said, “As we celebrate our 117th year of independence here in the Philippines, the conclusion of the Senior Finance Officials’ Meeting in Bagac, Bataan marks our commitment to forge a freer future for our people, in terms of building more resilient, inclusive, and sustainable economies across the region. It is perhaps fitting that one of CAP’s milestones lies in a place where freedom has been fought for ever so bravely.”
Thanking the senior finance officials’ collaborative spirit throughout the meeting, Purisima added, “I look forward to the Finance Ministerial Meeting in September. The Cebu Action Plan is both a strategic response to current opportunities and challenges and a lasting vision for the future.”
With complex forces like falling oil prices and changes in monetary policies shaping the region’s outlook, Odd Per Brekk of the International Monetary Fund reported that there is rising demand to support the growth and recovery efforts among economies in the Asia Pacific by boosting infrastructure investments and undertaking structural reform to boost potential economic output.
Arjun Goswami of the ADB underscored how improving financial inclusion by lowering the cost of sending remittances is important as developing APEC economies received $135 billion remittances annually in the past 5 years. To this end, the Cebu Action Plan was commended for its proactive approach to remittance cost reduction.
Relatedly, the CAP’s emphasis on developing capital markets to enhance financial resiliency was affirmed by the ADB as a way to address the region’s vulnerabilities to sudden reversals of capital flows and disasters. With a disaster-prone region with cost of damages reaching $1.2 trillion over the last decade, the CAP is a robust response to enable member economies to absorb shocks better, through strengthening regional safety nets, cooperating in disaster management and risk financing, and building deeper financial markets.
The CAP’s pillar on infrastructure development and financing has a focus on urban development and regional connectivity, apt for the future of a growing region. The ADB says urban populations in APEC are projected to increase rapidly from 1.8 billion in 2013 to 2.4 billion people by 2050. Meanwhile, the ADB has earlier projected a $1 trillion per year infrastructure financing gap for 2010-2020, in which the private sector is expected to contribute 40%.
The ADB encouraged the development of local currency (LCY) bond markets to help promote financial integration and accelerate infrastructure development. Since 2010, emerging East Asian LCY bonds outstanding expanded 13% annually, reaching $8.2 trillion at end-2014, where a significant portion of ASEAN LCY bonds are issued by infrastructure-related entities (Philippines- 20%, Singapore- 25%, Vietnam- 18%). A key priority will be attracting private sector capital through value-for-money PPPs to deliver crucial infrastructure.
Finance Undersecretary Gil S. Beltran said, “The Senior Finance Officials’ Meeting ends today with a broad consensus that inclusive, sustainable growth in the Asia Pacific is within reach. Each of the four pillars of the Cebu Action Plan is firmly aligned to the challenges and opportunities of the common future we face.
I thank each delegation for their hard work and resolute commitment in refining a CAP that will ensure shared prosperity across the Asia Pacific. I am encouraged by the support we have received and look forward to the next sessions under the Finance Ministers’ Process of this year’s APEC meetings.”
