IMF, ADB and WB to support Asian monetary fund
IMF, ADB and WB to support Asian monetary fund
MANILA (AFP): International financial institutions have expressed support for a proposed Asian monetary fund to cushion crisis-ridden regional economies, despite earlier reservations, a Philippine official said yesterday.
The International Monetary Fund (IMF), the Asian Development Bank (ADB) and the World Bank have expressed support for the regional initiative, Finance Secretary Roberto de Ocampo said.
He said all three institutions would attend a meeting of vice finance ministers from Japan and the Association of Southeast Asian Nations (ASEAN), to be held in Manila Nov. 18-19, to discuss the creation of the fund.
ASEAN groups Brunei, Myanmar, Indonesia, Laos, Malaysia, the Philippines Singapore, Thailand and Vietnam.
The Asian monetary fund has been proposed by Southeast Asian nations and Japan to supplement the IMF and alleviate the effects of economic problems such as the currency crisis sweeping the region.
Regional currency and stock markets have been beset by turmoil since Thailand effectively devalued its currency, the baht, on July 2.
The IMF has previously warned against the proposed Asian bailout fund, saying it could undercut conditions attached to its economic assistance programs.
However, de Ocampo said the IMF had expressed support for the fund after being informed that it would be used to complement IMF facilities.
He added that the IMF had written to finance ministers of Southeast Asia to inform them of its support.
De Ocampo also released a letter from IMF first deputy managing director Stanley Fisher outlining the principles the IMF proposed to govern the establishment of the fund.
In the letter, Fisher said it was "desirable to set up a regional surveillance group, to meet regularly" to watch for any impending crisis. The IMF Tokyo office could serve as the secretariat of such a group.
Although the IMF and other multilateral agencies would normally finance adjustment programs, a large-scale crisis would require supplemental funding and this could come from "a cooperative financing initiative," the letter said.
This would include getting legislative authority from each country to contribute to a fund in support of an IMF program for any besieged member of the group, the letter added.
The members of the group would also be decided by the countries concerned, the IMF added.
The letter, which was sent last month, conceded that there were "several variants of these principles" which could be applied.
De Ocampo said the meeting in Manila would take up the IMF's proposals as well as other details such as who will contribute to the fund and how much as well as discussing the conditions in which a country could draw on the fund.
Also at the meeting, the World Bank will submit a paper on how to deal with surges in short-term capital that can be easily withdrawn, destabilizing developing economies.
De Ocampo cited Chile's system in which portfolio investors were required to make a deposit with its central bank to ensure their investments will not be pulled out of the country for a certain period.