Mahathir says no to IMF role in currency swap plan
Mahathir says no to IMF role in currency swap plan
KUALA LUMPUR (AFP): Prime Minister Mahathir Mohamad on Thursday reiterated Malaysia's objection to IMF surveillance in a regional currency swap plan designed to avert future financial crises.
But Mahathir said that if the majority of countries insisted on having the International Monetary Fund (IMF) to supervise disbursements, than "we have no choice."
The premier warned however that Asian countries would not benefit as the IMF methodology and approach had not helped financially-troubled economies in the past.
"We agree with the setting up of the fund but why is there a need to refer to the IMF?" he was quoted as saying by Bernama news agency.
"If everybody thinks it is important to refer to the IMF, then we are a lone voice but that is our stand."
Mahathir added: "We don't yield very easily."
The issue of IMF involvement has dogged implementation of the so-called Chiang Mai initiative to link the international reserves of the 10 ASEAN countries with those of economic heavyweights China, South Korea and Japan.
The initiative -- named after the Thai city where it was mooted last May -- originally proposed that a borrower nation could draw 10 percent of an agreed credit line, with future disbursement tied to IMF supervision.
The issue has assumed greater urgency as the region's export- driven economies are hit by a global slowdown and the falling yen drags down Southeast Asian currencies.
Malaysia, which is deeply suspicious of IMF prescriptions and refused its help in 1997/98, had led objections. But the Northeast Asian nations want IMF surveillance to ensure the money is used properly.
Finance minister from the Association of Southeast Asian Nations (ASEAN) agreed this month that borrowers and lenders should negotiate terms with each other.
ASEAN finance ministers will meet their counterparts from China, Japan and South Korea in Honolulu next month on the sidelines of Asian Development Bank meetings.