Asia's long-term outlook favorable: IMF committee<\/p>\n
HONG KONG (AFP): The long-term outlook for Asian countries,
\nswept by currency turmoil, is favorable due to their solid
\neconomic fundamentals, the IMF policymaking body said yesterday.<\/p>\n
The Interim Committee said in a statement after a meeting here
\nthat \"the impact of recent financial market turmoil on some of
\nthe countries affected is expected to result in a slowdown of
\ngrowth in the near-term.\"<\/p>\n
But their economic fundamentals remained solid \"and their
\nlonger-term outlook is favorable, provided the required
\nadjustment policies are sustained,\" said the statement.<\/p>\n
The committee said the disturbances Asian financial markets
\nhad underscored the need to ensure the internal consistency of
\neconomic policy, \"strengthen financial systems, and avoid
\nexcessive external deficit and reliance on short-term foreign
\nborrowing.\"<\/p>\n
The Asian experience illustrated that rising capital flows may
\nrequire some adaptions to exchange rate mechanisms to changing
\ncircumstances, the statement said.<\/p>\n
\"Regardless of a country's exchange rate arrangement, the
\nmaintenance of appropriate macroeconomic and structural policies
\nconsistent with the arrangement remains crucial.\"<\/p>\n
Upheaval in Southeast Asian financial markets was triggered by
\nthe de facto devaluation of the Thai baht on July 2 which has
\nshaved off more than a third of the currency's value.<\/p>\n
With its economy in deep crisis and its finance sector
\nburdened by billions of dollars in bad debt, Thailand went cap in
\nhad to the IMF and secured a US$17.2-billion credit line to put
\nits house in order.<\/p>\n
Free Flow<\/p>\n
The committee also backed moves that would enable the Fund to
\npromote the free flow of capital.<\/p>\n
It called on the IMF executive board to complete work on
\namending articles governing the Fund's operation.<\/p>\n
\"The committee invites the executive board to complete its
\nwork on a proposed amendment to the Fund's articles that would
\nmake the liberalization of capital movements one of the purposes
\nof the Fund,\" the committee said in the statement.<\/p>\n
But apparently acknowledging fears in developing countries, it
\nadded that \"safeguards and transitional arrangements are
\nnecessary for the success of this major endeavor.\"<\/p>\n
Developing nations have expressed concern that their fragile
\neconomies could be overwhelmed and disrupted by a flood of
\nforeign capital and have insisted on technical assistance to
\nprepare their financial sectors.<\/p>\n
The committee said that \"provided it is introduced in an
\norderly manner and backed both by adequate national policies and
\na solid multilateral system for surveillance and financial
\nsupport, the liberalization of capital flows is an essential
\nelement of an efficient international monetary system in this age
\nof globalization.\"<\/p>\n
In a separate communique the Interim Committee warned that the
\nUnited States must \"guard against the re-emergence of inflation.\"<\/p>\n
It said Japan was challenged to \"achieve the objective of
\ndomestic demand-led growth with a supportive stance of monetary
\npolicy\" and urged European countries saddled with high
\nunemployment to make \"more determined efforts to increase
\nefficiency and adaptability in labor and product markets.\"<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/asias-long-term-outlook-favorable-imf-committee-1447893297",
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