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.