Southeast Asian nations have largely abandoned the idea of a permanent “Asia Fund” to help countries facing economic crisis.
Instead, they generally favour an arrangement in which countries would agree to contribute to bail-out packages organised by the International Monetary Fund (I-M-F).
Finance officials from Asian nations, North America, Australia and New Zealand began two days of meetings on Tuesday to discuss how to alleviate Asia’s current economic turmoil.
Asia’s financial crisis, along with trade liberalisation will be on the agenda at he Asia-Pacific Economic Cooperation (APEC) forum which will begin a series of meetings in Canada, on Wednesday.
Philippine Finance Secretary Roberto de Ocampo opened a two-day meeting among finance officials from Asia, North America and Australia and New Zealand.
They have gathered in Manila to discuss what kind of mechanism should be established to deal with Asia’s currency turmoil and prevent such crises from recurring.
In the latest crisis, some Asian currencies plunged by as much as 40 per cent and even the economies of healthy countries were affected.
Japan originally proposed the creation of an independent fund.
But other countries said such a fund would endanger the I-M-F’s ability to demand economic reforms as a condition for economic bail-outs.
It would allow countries to prop up their currencies without making the required reforms.
De Ocampo, the host of the meeting, said most participants now believe there should be no permanent large pool of funds.
He said the countries would agree to provide money if the needs of a participating nation exceed the limits of the I-M-F.
He also said such a supplementary financing mechanism would assure countries of the availability of money as they pursue needed reforms and adjustment measures in conjunction with the I-M-F.
And he spoke of the need for neighbours to help each other.
SOUNDBITE: (English)
“The onset of the financial turmoil has given us an opportunity to display the same spirit of oneness at the regional level. We must work and collaborate closely with one another to see a rapid
restoration of financial stability in this region. For this to happen, we must draw on the region’s resources. We must likewise closely coordinate with multilateral institutions particularly the I-M-F.”
SUPER CAPTION: Roberto de Ocampo, Philippine Finance Secretary
De Ocampo earlier spoke of what needed to be done to avert further economic problems.
SOUNDBITE: (English)
“I think a number of lessons were learned which are important to now formalise into some mechanisms. The first is the need for greater
transparency, better monitoring, and third, strengthening of financial and banking systems, which would require, among others, entities like the IMF to beef up their monitoring capability. Members countries of IMF to agree to a more transparent means of sharing data through Internet, through whatever. Agruppations (groups of) of countries like ASEAN to do the same.”
SUPER CAPTION: Roberto de Ocampo, Philippine Finance Secretary
The Philippines is one of the countries in the region hit by the crisis, with its peso falling by as much as 26 per cent against the U-S dollar.
In a recent interview, Central Bank Governor Gabriel Singson expressed his confidence that the country will be able to survive.
But he stressed the importance of putting up some kind of facility to minimise the possibility of the same crisis happening again.
SOUNDBITE: (English)
SUPER CAPTION: Gabriel Singson, Governor, Philippine Central Bank
Officials from the I-M-F, the Asian Development Bank and the World Bank are also attending.

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