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Friday, October 17, 2008
Finance managers clarify $10-B Asean fund
MANILA -- In an effort to shield President Arroyo from embarrassment Palace officials clarified Thursday that it was the International Monetary Fund (IMF) that committed $10 billion for the Asian region.
Finance Secretary Margarito Teves and Planning Secretary Ralph Recto made the clarification, a day after President Gloria Macapagal-Arroyo announced that the World Bank agreed to contribute US$10 billion to a new regional liquidity fund to help Asian nations cope with the global financial crisis.
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The World Bank in a statement said the bank did not anticipate the establishment of such a fund and has not "discussed commitments of funds at the regional level."
Teves and Recto are both in Washington attending a meeting of the Association of Southeast Asian Nation (Asean) ministers with officials of the World Bank and IMF.
Asean is composed of the Philippines, Indonesia, Thailand, Malaysia, Singapore, Brunei, Vietman, Myanmar, Cambodia, and Laos. They are setting up a standby fund to help their member-countries affected by the global economic crisis.
Teves, in a telephone interview, said Trade Secretary Peter Favila called him up at 5 p.m. Thursday to say he and his staff had gone over their notes on the Asean meeting with the IMF-World Bank and “saw it was the IMF and not the World Bank” that made the commitment.
Recto, for his part, confirmed that it was the IMF that mentioned the $10 billion facility for the Southeast Asia region. He said the IMF pledge is on top of its existing $1.3 billion facility for countries with problem of balance of payments.
World Bank officials said while it is committed to supporting countries in East Asia in dealing with the global financial turmoil, they denied Arroyo’s statement that they have “discussed commitments of funds at the regional level.”
The World Bank added that they do not anticipate the establishment of a regional facility.
According to Favila, President Arroyo based her speech in a report made by Teves on the outcome of the first meeting of the Asean ministers with the IMF and the World Bank where the idea of a standby facility was discussed. It was also in this meeting that the IMF made the commitment.
He said Arroyo after receiving Teves’s report directed him to push for the concretizing of the proposed standby fund during successive meetings.
In the second meeting, the World Bank through its vice president for East Asia and the Pacific Jim Adams said they are more inclined to “providing the fund on a bank-wide global facility which appears not solely for Asean.”
Adams said this means that they prefer to deal and provide assistance to the individual countries than deal with them as a group or region. He said this had not been relayed to the President until Thursday morning and after the World Bank had issued its statement.
"East Asian economies continue to perform strongly and have made significant changes since the 1997 Asian financial crisis making them more resilient to the impacts of the current global turbulence," he said.
"Like all countries, Asian economies must be prepared to deal with any effects of the turmoil," he said.
“So they’re (World Bank) now working on what kind of facility they would be making available to the (Asean) secretariat. In fact, they’re now shifting the discussions from regional facility to a bilateral,” Favila said of the World Bank.
Asked how this would affect the proposed Asean standby fund, the trade secretary said it could either proceed or not, but it would be better to await the report of the Asean secretariat and its technical working group.
Teves, in a text message to Favila, said the Asean secretariat would be the lead group in crafting and implementing the details and mechanism for the proposed cooperation between the Asean and the financial institutions.
He said the secretariat is expected to present the proposal during the Asean plus three meeting at the sideline of the Asia-Europe Meeting in Beijing from October 24 to 25, for the leaders to “approve it in principle.”
Once it is approved in principle, continued consultations along with the details of the implementing mechanisms would be discussed in a follow up meeting to be held in Manila on November 12.
“This then will be presented to the heads of state meeting in Bangkok and that is the Asean leaders’ meeting for their consideration and approval. What is important is for guidelines to be consistent to the shared principles that the facility should be fairly sizeable, quick disbursing and with minimum conditionality,” Teves’s text message further read.
Favila said there was no one to blame for the incident that stemmed from the President’s announcement, adding that it was not prematurely made as she was merely relaying what transpire in the first meeting.
He added that Teves should also not be blamed as “all the discussions started as exploratory and preliminary in character.”
Asked if the President was disappointed with the confusion that resulted from her announcement, Favila said: “No, to the President what is important is that the Asean initiative is being supported by the World Bank.” (JMR/Sunnex)
For more Philippine news, visit Sun.Star Davao. (October 17, 2008 issue)
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