By Seri Begawan
March 24, 2000
Bandar - The International Monetary Fund is prepared to support Japan's proposal for an Asian monetary fund if it does not run counter to the IMF. "Whatever the details of the Asian monetary fund are going to be, I think it is important that the activities of the fund are not inconsistent with the activities of the IMF," IMF regional director Kunio Saito said.
"If the Asian monetary fund is ever to be established, the IMF is very happy to co-operate." Tokyo-based Mr Saito was speaking ahead of a meeting this weekend of Asean finance ministers.
He had earlier briefed finance and central bank deputies preparing for the ministerial gathering on the IMF's outlook for the region, which he said should grow by 4.5 per cent this year from 2.5 per cent last year.
Organisers said the proposed Asian fund is in the agenda for a meeting between Asean ministers and finance ministry deputies from the mainland, Japan and South Korea. Asean groups Brunei, Cambodia, Indonesia, Laos, Myanmar, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
Former Japanese vice-finance minister Eisuke Sakakibara this month rekindled debate over the creation of an Asian emergency facility to help the region deal with future crises similar to the 1997 financial turmoil. Objections by the US and Europe on the grounds such a fund could undermine the discipline imposed by the IMF did not hold water, he said.
Tokyo first broached the idea shortly after the crisis broke out in mid-1997 and was immediately supported by Asean. However, the idea failed to prosper due to strong US and European opposition. Mr Saito said the proposed Asian fund should help enhance regional co-operation if it did not run counter to the IMF's role.
The IMF has arranged a multi-billion dollar bailout fund for crisis-stricken Asian economies, but the assistance came with harsh prescriptions for sweeping reforms. Mr Saito acknowledged that a separate multi-billion dollar fund made available by Japan, and named after Finance Minister Kiichi Miyazawa, to help crisis-affected countries was "a version" of the proposed Asian Monetary Fund. But he said it was his understanding that an Asian fund should be an independent entity and not sponsored by a single country.
Asean finance ministers who met together with trade ministers and central bank governors in Manila last year had sought to make the so-called Miyazawa fund permanent. But Mr Saito said: "To make the Miyazawa fund permanent means lots of tax money on the part of Japanese citizens and the Japanese Government certainly has to think about this."
Mr Sakakibara said that Europe or the US were unlikely to be "motivated" to provide funds in case of a future crisis and so Asia must pool some kind of an emergency facility. If the function of the proposed Asian fund would be narrowed down just to provide liquidity during crises, with a specific formula for private sector participation, it could complement the IMF, he said.
"We have to be vigilant and quickly create the regional defence mechanism for the next crisis that could hit us," Mr Sakakibara said, once known as "Mr. Yen" for his influence on the movement of the Japanese currency.
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