ASEAN states to expand money swap arrangement<\/p>\n
BANDAR SERI BEGAWAN (Reuters): Southeast Asian finance
\nministers on Saturday watered down their plans to create a
\nregional support fund and instead focussed on expanding an
\nexisting facility to tackle future balance of payments crisis.<\/p>\n
Plans to create an Asian Monetary Fund failed to take off in
\nabsence of adequate support from major economic powers, said
\nofficials meeting in the oil-rich sultanate.<\/p>\n
Thailand Finance Minister Tarrin Nimmanahaeminda said the
\nmeeting of the ASEAN finance ministers agreed on expanding the
\nexisting currency swap arrangement among their central banks and
\ninclude Japan, China and South Korea to enlarge the kitty.<\/p>\n
"ASEAN finance ministers did not have any signals from major
\ncountries on proposals on AMF (Asian Monetary Fund). So we mainly
\ndiscussed an augmentation to the currency swap arrangements among
\nthe central banks," Tarrin said.<\/p>\n
Officials said that ASEAN's international reserves along with
\nthe three other economic powerhouses of Asia -- China, Korea and
\nJapan -- can be used to bail out economies facing balance of
\npayments crisis.<\/p>\n
Asked what would be the size of the new swap arrangement,
\nTarrin said: "That's difficult to say now".<\/p>\n
ASEAN central banks in January renewed an agreement on
\ncurrency swaps which provides short-term liquidity financing to
\nease temporary balance of payments needs.<\/p>\n
Some have suggested making the $30 billion Miyazawa plan, set
\nup to help Asian economies through the region's economic crisis,
\na permanent facility.<\/p>\n
"But that would depend upon the Japanese. They have to take
\nthe initiative," said Rodolfo Certeza Severino, secretary general
\nof ASEAN.<\/p>\n
ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia,
\nMyanmar, the Philippines, Singapore, Thailand and Vietnam.<\/p>\n
Senior finance officials and central bank deputies, who met
\nahead of the weekend finance ministers conference, unanimously
\nagreed on Friday to re-open a two-year debate on setting up a
\nregional financial support fund to aid economies in distress.<\/p>\n
But the finance ministers barely touched on the vexed issue of
\nan Asian Monetary Fund, which has drawn sharp criticism from the
\nUnited States and other Western nations.<\/p>\n
Officials said that the ministers could take up the AMF issue
\nat their next meeting in Chiang Mai in Thailand.<\/p>\n
They allayed the fears of the U.S. and other Western nations
\nby saying that the proposed fund would be consistent with, and
\nnot duplicate, the activities of the International Monetary Fund
\n(IMF).<\/p>\n
The U.S. fears that a separate Asian financial facility could
\nundermine IMF and weaken Asian countries's willingness to adopt
\ntough reforms advocated by the IMF.<\/p>\n
The IMF extended large fiscal and monetary bail-out packages
\nto Thailand, Indonesia and South Korea in the wake of the Asian
\neconomic crisis.<\/p>\n
But Malaysia, a strong proponent of the regional financial
\nfacility, has voiced resentment at tough economic reforms
\ndemanded by the IMF as part of the rescue packages.<\/p>\n
ASEAN finance ministers pledged to sustain their fledgling
\nregional economic recovery by stimulating domestic demand,
\ninducing more private investment and carry out economic reforms.<\/p>\n
"I guess it (crisis) tells us to increase regional
\ncooperation, boost domestic demand and reinforce each other,"
\nsaid Philippines Finance Secretary Jose Pardo.<\/p>\n
The ministers also discussed a report on the exchange of
\neconomic data as part of an effort to set up an early-warning
\nmechanism to detect structural weaknesses in the region.<\/p>",
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