IMF wants more debate on planned Asian fund<\/p>\n
By Vincent Lingga<\/p>\n
HONG KONG (JP): The International Monetary Fund said yesterday
\nit wanted to see more debate on the proposal for setting up an
\nAsian monetary fund for coping with a regional financial crisis.<\/p>\n
IMF Managing Director Michel Camdessus said there was still a
\nlack of consensus among the finance ministers meeting here over
\nthe last three days regarding the form of such a facility.<\/p>\n
"We want to be clear what are the building blocks for the
\nscheme," Camdessus told reporters at the end of the IMF-World
\nBank annual meeting.<\/p>\n
He said that whatever would eventually come out of the
\nproposed regional fund scheme should be subordinated to the IMF.<\/p>\n
Most developed countries have been lukewarm to the idea of an
\nAsian crisis fund to cope with an emergency situation like the
\none which hit Thailand in early July.<\/p>\n
They argue that such a fund may provide the wrong signal to
\ncurrency speculators, further encouraging them to bet on certain
\ncurrencies.<\/p>\n
The United States, however, has relaxed its attitude toward
\nthat idea and Secretary of the Treasury Robert Rubin has
\nexpressed his willingness to discuss the proposed scheme further
\nwith Asian ministers and the IMF.<\/p>\n
The IMF also reacted coolly to the idea after Japan raised the
\nproposed scheme at the Group of Seven (G-7) leading industrial
\ncountries meeting here Saturday on the sidelines of the IMF-World
\nBank annual gathering.<\/p>\n
President Soeharto raised the idea of a kind of regional
\nsafety net to cope with a currency crisis in early August but at
\nthe time he proposed it to be an ASEAN scheme.<\/p>\n
The IMF has argued that such a fund may weaken or dilute the
\nconditionality attached to its recovery programs in member
\ncountries and may even weaken the market discipline in countries
\nprotected by such a crisis fund.<\/p>\n
"We have learned many great lessons from the turmoil in
\nSoutheast Asia and the IMF has also shown its capability in
\nquickly putting up the necessary recovery program," Camdessus
\nadded.<\/p>\n
He said one of the great things missing in Southeast Asia was
\neffective regional surveillance which would have put peer
\npressure on neighboring countries to maintain sound macroeconomic
\npolicies and market discipline.<\/p>\n
"But the Thai package (US$17.2 billion financial bail out)
\nhas shown the great solidarity among Asian countries," Camdessus
\nsaid in referring to the active participation of many Southeast
\nAsian countries, including Indonesia.<\/p>\n
The Indonesian government contributed $500 million to the Thai
\naid package.<\/p>\n
Camdessus noted earlier in closing remarks to the IMF-World
\nBank meeting yesterday that ministers had attached vital
\nimportance to good governance in all dimensions.<\/p>\n
"You can count on the IMF to play its part in promoting good
\ngovernance in all member countries," he added.<\/p>\n
He appreciated the quick and firm decision taken by the
\nmeeting to increase the IMF capital by 45 percent to $286 billion
\nand the agreement on a one-time allocation of the special drawing
\nrights (IMF reserve assets).<\/p>\n
Camdessus added the IMF and World Bank would work closely
\ntogether to help strengthen financial systems and disseminate
\nbest practices on the basis of the new framework for financial
\nsector soundness.<\/p>",
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