Strict checks advised for Asian rescue fund<\/p>\n
TOKYO (Reuters): Japan's US$30 billion plan aimed at restoring
\nstability in crisis-hit Asia will be effective if accompanied by
\na strict surveillance mechanism, analysts and traders said on
\nMonday.<\/p>\n
Japanese Finance Minister Kiichi Miyazawa announced the
\n\"Miyazawa Plan\" at Saturday's meeting in Washington of the
\nfinance ministers of South Korea, Malaysia, the Philippines,
\nSingapore, Thailand and Indonesia.<\/p>\n
Under the $30 billion plan, $15 billion will be set aside for
\nmedium- to long-term financial needs to promote economic recovery
\nin Asia, with the rest for potential short-term capital
\nrequirements as the countries implement economic reforms.<\/p>\n
The Miyazawa Plan was welcomed by the United States and Asian
\nnations, but analysts suggested it should be implemented
\ncarefully.<\/p>\n
\"Chances are that the plan may develop into a new financial
\ninstitution in the region,\" said Fumiyuki Sasaki, economist at
\nNomura Research Institute (NRI).<\/p>\n
\"But its success largely depends on the conditions attached to
\neach piece of financing,\" he said.<\/p>\n
Daisuke Hiratsuka, senior research fellow at the Institute of
\nDeveloping Economies, said: \"The package could be very effective
\nin a situation where the nations are struggling to recover, even
\nby export-led growth.\"<\/p>\n
Takashi Nobehara, general manager of the Centre for Asian
\nResearch at the Japan Research Institute, said: \"It may be
\nproblematic if most money in the plan is used to clean up bad
\nloans, as it is not clear how much in bad loans actually exists
\nin the would-be recipient countries. A $30 billion fund might not
\nbe enough.<\/p>\n
\"Debt guarantees can be risky as there is always a possibility
\nof default, particularly in countries like Indonesia. Defaults
\nwill have a substantial impact on the fiscal positions of
\ncreditor countries,\" Nobehara said.<\/p>\n
He said that because of the default possibility, there needed
\nto be a consensus on rules governing the fund, and there needed
\nto be the ability to check the situation in each country before
\nany funds were provided.<\/p>\n
\"The impression we got was that Japan hastily drew up this
\npackage without first building this much-needed consensus. That
\nis a cause for concern,\" he added.<\/p>\n
But the analysts said the formation of such an aid package
\ncould clearly have an impact and help pave the way to
\nstabilization of the economic situation in the region.<\/p>",
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