ASEAN to link currency swap to IMF

ASEAN to link currency swap to IMF

KUALA LUMPUR, Malaysia (AP): Overcoming opposition from
Malaysia, Southeast Asian countries agreed Saturday that planned
currency swap arrangements with China, Japan and South Korea
would complement International Monetary Fund programs.

Amid growing gloom about how badly the U.S. economic downturn
and Japan's financial woes will hit their export-driven
economies, ministers of the Association of Southeast Asian
Nations, or ASEAN, resumed work Saturday on currency swap
agreements which aim to safeguard them against a repeat of the
1997-98 financial crisis with plunged the region into recession.

Under a plan agreed to in May last year, ASEAN countries will
set up a US$1 billion currency swap arrangement which will allow
members to draw on support "in the event of temporary balance of
payments difficulties."

They are also pursuing consensus on a separate network of
bilateral currency swap agreements with Japan, China and South
Korea, but have had difficulty agreeing on the details.

Before ASEAN finance ministers began meeting in Kuala Lumpur
Saturday, Malaysia opposed the swap agreements with the northern
Asian countries being subject to IMF conditions because it is not
a member of the fund.

But a statement released at the end of the first day of talks
said: "There was consensus that the bilateral swap agreement
would be complementary and supplementary to IMF facilities."

Malaysia's Finance Minister Daim Zainuddin told reporters
after the meeting that his government had "never objected to an
IMF role" in the currency swaps. This appeared to contradict
Daim's statement to reporters in March that, "We are not under
the IMF, so why do they impose these conditions?"

Officials said before Saturday's meeting that ASEAN ministers
wanted consensus on the issue before discussing it with the
northern Asian countries. The ministers will meet with officials
from Japan, China and South Korea on Sunday.

The meeting comes as most countries, apart from Malaysia, are
grappling with currency weakness against the U.S. dollar,
plunging exports and manufacturing output growth, as well as
political leadership scuffles in the region. Malaysia imposed
capital controls during the Asian crisis which effectively pegs
the ringgit to the U.S. dollar.

In remarks to open the meeting, Daim said the U.S. slowdown
and Japan's problems were of concern to ASEAN countries. The
United States and Japan are Southeast Asia's two biggest export
markets.

"At the global level, we are all bracing ourselves for the
slowing down of the world economy following the already
moderating U.S. economy," he said. "What remains uncertain at
this point is the magnitude, duration and severity of the
slowdown."

Many governments in the region have in recent weeks revised
downward their forecast growth rates for 2001, blaming declining
U.S. demand for electronics and other exports.

Daim said ASEAN's task was to sustain the growth of individual
economies to secure economic stability and resilience and to
"remain focussed on the longer term issues including preventing
the recurrence of the currency and financial crisis."

ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, Thailand and Vietnam.