IMF wants more debate on planned Asian fund
By Vincent Lingga
HONG KONG (JP): The International Monetary Fund said yesterday it wanted to see more debate on the proposal for setting up an Asian monetary fund for coping with a regional financial crisis.
IMF Managing Director Michel Camdessus said there was still a lack of consensus among the finance ministers meeting here over the last three days regarding the form of such a facility.
"We want to be clear what are the building blocks for the scheme," Camdessus told reporters at the end of the IMF-World Bank annual meeting.
He said that whatever would eventually come out of the proposed regional fund scheme should be subordinated to the IMF.
Most developed countries have been lukewarm to the idea of an Asian crisis fund to cope with an emergency situation like the one which hit Thailand in early July.
They argue that such a fund may provide the wrong signal to currency speculators, further encouraging them to bet on certain currencies.
The United States, however, has relaxed its attitude toward that idea and Secretary of the Treasury Robert Rubin has expressed his willingness to discuss the proposed scheme further with Asian ministers and the IMF.
The IMF also reacted coolly to the idea after Japan raised the proposed scheme at the Group of Seven (G-7) leading industrial countries meeting here Saturday on the sidelines of the IMF-World Bank annual gathering.
President Soeharto raised the idea of a kind of regional safety net to cope with a currency crisis in early August but at the time he proposed it to be an ASEAN scheme.
The IMF has argued that such a fund may weaken or dilute the conditionality attached to its recovery programs in member countries and may even weaken the market discipline in countries protected by such a crisis fund.
"We have learned many great lessons from the turmoil in Southeast Asia and the IMF has also shown its capability in quickly putting up the necessary recovery program," Camdessus added.
He said one of the great things missing in Southeast Asia was effective regional surveillance which would have put peer pressure on neighboring countries to maintain sound macroeconomic policies and market discipline.
"But the Thai package (US$17.2 billion financial bail out) has shown the great solidarity among Asian countries," Camdessus said in referring to the active participation of many Southeast Asian countries, including Indonesia.
The Indonesian government contributed $500 million to the Thai aid package.
Camdessus noted earlier in closing remarks to the IMF-World Bank meeting yesterday that ministers had attached vital importance to good governance in all dimensions.
"You can count on the IMF to play its part in promoting good governance in all member countries," he added.
He appreciated the quick and firm decision taken by the meeting to increase the IMF capital by 45 percent to $286 billion and the agreement on a one-time allocation of the special drawing rights (IMF reserve assets).
Camdessus added the IMF and World Bank would work closely together to help strengthen financial systems and disseminate best practices on the basis of the new framework for financial sector soundness.