SBV Deputy Governor Nguyen Thi Hong co-chaired virtual conference of ASEAN+3 Finance and Central Bank Deputies’ Meeting (AFCDM + 3)

Also attending the Conference, there were Deputy Governors, Vice Ministers and representatives from the central banks, the Ministries of Finance of the ASEAN+3 member countries. At the Conference, the ASEAN Finance and Central Bank Deputies and counter-partners from China, South Korea and Japan had active discussions, focusing on: (i) Discussion on the macro-economic situations, measures to cope with the Covid-19 pandemic in the ASEAN+3 countries; (ii) The cooperation process under the Chiang Mai Initiative Multilateralization (CMIM); (iii) The operational status of the ASEAN+3 Macroeconomic Research Office (AMRO); (iv) The implementation of the initiatives within the framework of ASEAN+3 Finance and Monetary Cooperation.

At the Conference, Deputy Governor Nguyen Thi Hong shared about the complicated developments of the Covid-19 outbreaks since the beginning of 2020, which has impacted all aspects of the socio-economic life in many countries around the world including Vietnam. The current difficult situations pose an urgent need for policy makers to promulgate and effectively implement response measures and general policies, in which special attention should be paid to the medium and long-term challenges, as well as the ability to utilize the ‘space’ in policy-making. Besides, strengthening the regional cooperation and mutual support plays an important role in helping the member countries to overcome this difficult period. According to Deputy Governor Nguyen Thi Hong, it is necessary to accelerate the ASEAN+3 Cooperation Process, especially in enhancing the effectiveness, flexibility and availability of the swap mechanism within the CMIM framework, when there are any actual swap demands from member countries.

SBV Deputy Governor Nguyen Thi Hong delivers a speech at the Conference

Meeting the urgent needs of the countries, in the informal session of AFCDM+3, the Deputies exchanged views and discussion on the "Strategy, Action and Policy Perspectives against Covid-19 Pandemic" on the background of a policy paper made by AMRO. The Deputies also updated their views on the regional and country specific macroeconomic outlooks, as well as policy measures in response to the Covid-19 pandemic, proposing a practical framework to assess and analyze the ‘space’" of the member countries' fiscal and monetary policies, thereby making appropriate policy recommendations based on the specific characteristics of each country. Specifically, AMRO provided an overall assessment of the economic status of each member state based on the debt sustainability indices that are comparatively correlated among regional economies. The results at the time of the study showed that most member economies have ample ‘policy space’ allowing them to apply fiscal stimulus policies at different levels, in which most of the BCLMV economies (Brunei Darussalam, Cambodia, Lao PDR, Myanmar and Vietnam) have a medium-to-large ‘space’ for fiscal policy.

In terms of monetary policies, based on the regional comparative indices, AMRO assesses that most of the economies now have ‘space’ for further easing of their monetary policies, in which the BCLMV economies have limited-to-moderate ‘space’ for monetary policies. Given unprecedented developments caused by the COVID-19 pandemic, it is difficult to predict the duration and severity as well as the economic and social impacts of the pandemic. And thus, the member countries should implement economic support measures at a larger level than normal.

Vice Minister Tran Xuan Ha of the Ministry of Finance delivers a speech at the Conference

In her concluding remarks of the Session on policy dialogue and economic reviews, Deputy Governor Nguyen Thi Hong summarized the discussions at the Conference, and proposed to further strengthen the existing cooperation mechanisms in the region, as well as to study and develop new coping measures matching the current disease situations. For example, (i) Enhancing the operational efficiency and the readiness of the bilateral/multilateral regional financial safety supervision mechanisms/networks: ASEAN Swap Arrangement (ASA) Initiative, CMIM Agreement; (ii) The banking system should continue its efforts and policy measures to support the immediate needs of the economy, while still ensuring the stability of the financial sector; (iii) Strengthening the regional coordination in inspection, supervision, coordinating flexibly the management regulations and the maintenance of minimum regulatory standards in accordance with the international standards and practices to ensure the health and stability of the banking sector in the medium and long term; (iv) Developing the capital market (issuing debt instruments), which is a channel to mobilize more resources for governments, organizations and businesses in containing, responding to and overcoming the consequences caused by the Covid- 19 pandemic (such as control, treatment for Covid-19 infected patients, vaccine manufacturing), and also sponsoring plans for economic recovery and reconstruction; and (v) Studying and developing mechanisms and tools for risk prevention: promoting the Southeast Asia Disaster Risk Insurance Facility (SEADRIF) initiative, issuing catastrophe bonds.

The SBV delegation at the Conference

Also within the framework of the Conference, the Deputy Governors of the Central Banks and the Vice Ministers of Finance adopted two important documents of the CMIM Agreement in order to improve the coordination processes among the parties in practice, specifically: (i) The Operational Guidelines for the CMIM Conditionality Framework within the cooperation with the IMF; and (ii) Updates on the amendments to the CMIM Agreement. In addition, the Conference also adopted the operational budget for AMRO in 2021 and discussed the ASEAN+3 cooperation initiatives in the near future. These contents will be summarized and reported to the ASEAN+3 Finance Ministers' and Central Bank Governors Meeting, which is scheduled to take place on September 18, 2020.

VA