APEC ministers warn of significant risks

APEC ministers warn of significant risks

LANGKAWI, Malaysia (AFP): APEC finance ministers warned of
"significant risks" for the region despite signs of returning
investor confidence and an improved economic outlook as they
ended talks here Sunday.

In a joint statement, the ministers also warned of "serious
challenges" especially in financial and corporate restructuring
and dealing with poverty in crisis-hit economies, notably
Indonesia, South Korea, Malaysia, the Philippines and Thailand.

"The financial crisis in the region has abated and there are
signs of a return in investor confidence" since they met in
Canada last year, the statement said, concluding two days of
talks.

"As a result, the economic outlook in the region has improved.
There are however, significant risks to the outlook.

"Serious challenges remain, particularly in restructuring the
financial and corporate sectors and in dealing with the effects
of the crisis on the poor and vulnerable," it added.

APEC ministers urged the International Monetary Fund (IMF) to
"consider further the issue of appropriate exchange rate
arrangements" taking into account the "recent experiences" of
members with collapsing currencies.

"Any regime adopted must be supported by consistent policies
and robust financial systems," the statement said.

The highlight of the meeting was an announcement by Japanese
Finance Minister Kiichi Miyazawa of a two trillion yen (US$17
billion) credit guarantee scheme for crisis-hit countries seeking
funds to restructure companies and develop resources.

Miyazawa said the "partial" guarantee scheme, due to start in
October and last about two years, would "accelerate the return of
private money" to Asian economies battered by financial turmoil
which erupted in mid-1997.

At the same time, he said the scheme should help develop Asian
bond markets which "need to be enhanced" in the areas of
transparency and disclosure while developing the infrastructure
of regional debt markets.

"We recognize the need for further work in this area including
developing reliable benchmark yield curves," the statement said.

The joint statement also called for investment in social
projects such as health and education to ease the impact of the
financial crisis on the poor.

"We remain concerned about unemployment and hardship among the
poor and the vulnerable as a result of the crisis," it said. "In
some economies, social strains have posed a risk to recovery."

In addition, APEC ministers urged the IMF to devise "guiding
principles" for economies that wanted to liberalize and open
their capital accounts.

IMF managing director Michel Camdessus, who also took part in
the meeting, said there was an "extremely open discussion" on
efforts to develop a new international financial architecture
"and the problem of associating the private sector to avoidance
of crises and resolution of them."

Camdessus said he was "quite impressed" by support for IMF
work including experience with exchange controls and "finding the
proper guidance for helping countries to go towards a free regime
of capital movements and, if controls are needed, the best way of
doing that without harming their economies."

Speaking at a joint news conference at the end of meeting, U.S
Deputy Treasury Secretary Lawrence Summers said the United States
was able to draw "some satisfaction" from the talks with other
ministers.

APEC, accounting for about 60 percent of the world economy,
groups Australia, Brunei, Canada, Chile, China, Hong Kong,
Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand,
Papua New Guinea, Peru, the Philippines, Russia,
Singapore,Taiwan, Thailand, the United States and Vietnam.