ASEAN+3 move step closer to FX swap plan: IMF
ASEAN+3 move step closer to FX swap plan: IMF
TOKYO (Reuters): Asian nations took a step towards realizing
an ambitious currency swap plan at the weekend by agreeing to
involve the International Monetary Fund in the scheme, a senior
IMF official said on Monday.
Kunio Saito, the IMF director for Asia and the Pacific, told
Reuters in an interview on Monday that the consensus reached by
the 10-member Association of Southeast Asian Nations (ASEAN)
should promote talks on finalizing bilateral swap agreements
(BSA) -- seen as an important first stage for the scheme.
"In my personal opinion, the (ASEAN) statement took care of
some dissatisfaction felt among Asian nations over the scheme. I
think it will make it easier for them to promote negotiations on
bilateral swap agreements," Saito said.
The plan aims to reduce volatility in currency markets by
linking ASEAN nations' foreign reserves with the three other
regional economic powerhouses -- China, Japan and South Korea.
Over the weekend, ASEAN finance ministers agreed that the
planned scheme would aim to complement and supplement IMF lending
facilities. The plan has been bogged down by differences over its
implementation and the question of the IMF's role.
Malaysia, which hosted the weekend ASEAN meeting, has been
especially unhappy at proposals to tie disbursements under the
swaps scheme to IMF-monitored reforms.
Saito said the IMF would support Asia's recent efforts to
promote regional cooperation with the currency swap plan, adding
that the fund also wanted Asian nations to cooperate with the
Washington-based institution on the matter.
"Swap arrangements would be related to the job of the IMF and
we want Asian nations to set up the arrangements while
cooperating with the IMF."
While ASEAN finance ministers said that there was consensus
that the bilateral swap agreements would complement and
supplement IMF facilities, their weekend statement left it up to
individual countries to work out the details.
"To be beneficial to the individual ASEAN countries, the terms
and modalities of the BSA should take into account the different
economic fundamentals, specific circumstances and financing needs
of individual countries," the statement said.
ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, Thailand and Vietnam.
While the ASEAN countries favored a loose case-by-case
approach to agreeing disbursement, the likely lender nations from
northeast Asia were less flexible.
Japan, the driving force behind the plan, has stressed that
the linkage to the IMF was necessary for the scheme and hopes to
sign as many bilateral agreements as possible before the ASEAN+3
group meets on the sidelines of the Asian Development Bank's
annual meeting in Honolulu next month.
Japanese officials have said Japan has made most progress with
Thailand so far, adding that they hope to announce the signing
before the Honolulu meeting, probably later this month.
Japan's top financial diplomat, Haruhiko Kuroda, last week met
Thai Finance Minister Somkid Jatusripitak in Bangkok to put the
final touches to a bilateral currency swap deal.
Saito joined a growing list of senior IMF officials warning
the fund would downgrade its growth forecast in its next World
Economic Outlook due out later this month.
Saito said he expected growth in Southeast Asian economies to
vary between 3.0-6.0 percent this year, compared with a previous
forecast of above six percent.
But he added that their growth would pick up in the second
half of this year because the current inventory adjustment for
information technology-related products would end and the
benefits of a recent series of credit easings in Japan and the
United States would appear later this year.
But although the IMF will downgrade its global economic
forecasts, "that does not mean there is a global recession and
nobody now thinks there will be another Asian crisis," he said.