ADB meet kicks off as E. Asia sets up S120bn fund
The Asian Development Bank launched its annual meeting with donors on Monday, a day after the region announced its first independent liquidity facility, a $120 billion fund to counter the economic crisis, reported Reuters.
Indonesian President Susilo Bambang Yudhoyono was scheduled to inaugurate the meeting, being held this year on the resort island of Bali and attended by finance ministers and central bank governors from most of the ADB's 67 member countries.
On Sunday, finance ministers from 13 East and Southeast Asian countries set up a $120 billion emergency fund to be launched by the end of the year aimed at countering the sort of capital flight experienced during the 1997/98 Asian financial crisis.
Japan, the region's biggest economy, also announced a plan to supply up to 6 trillion yen ($61.54 billion) to support its neighbours in an economic downturn.
China and Japan have each committed to provide 32 percent of the regional fund, known as the Chiang Mai Initiative. South Korea has committed to 16 percent, with the rest coming from the 10-member Association of South East Asian Nations (Asean).
Officials were quick to emphasise the moves were intended to complement rather than replace the role of the International Monetary Fund and other agencies fighting global recession.
"We are seeing a greater multilateralisation and expansion of the Chiang Mai Initiative which is not at the cost of the region's role in the IMF or the IMF's role in the region," said ADB Managing Director General Rajat Nag.
But he added: "After the 1997 financial crisis, one lesson that Asia learned was you better be ready to depend on yourself.
"If the region is going to be an economic growth centre, it is also appropriate that it knows it has the resources and reserves to stand on its own feet."
While Asian banks have largely avoided the credit crisis that tore through Wall Street and much of Europe, the export-focused region has since been hit by the downturn in the West, which has eroded demand for Asian automobiles, electronics and other goods.
The region's economies are likely to grow just 3.4 percent in 2009, the slowest pace since the Asian financial crisis a decade ago, the ADB has forecast. It sees growth recovering to 6.3 percent next year if demand rebounds.
"The current global situation requires more concerted efforts to enhance confidence, maintain financial stability, and prevent further decline in economic growth," a joint statement by the region's finance ministers said on Sunday.
"The deepening global economic downturn, coupled with heightened risk aversion in financial markets, (has) adversely impacted trade and investment in the region."
The regional fund signals the growing clout of China, ADB delegates said, pointing to its equal billing with Japan in commitments. After the United States, Japan and China are the second- and third-biggest economies in the world.
"The details of the agreement reflect China's ascent in the economic community," said a participant, who declined to be identified because of the sensitivity of the topic.
The ADB itself plans to ramp up lending to about $33 billion in 2009 and 2010, almost a 50 percent increase over 2007-2008, to counter the crisis. The Manila-based multilateral lender is funded by donations mainly from Japan, the United States and European nations.
The donors will formally endorse a decision to hike the ADB's capital base to $165 billion from $55 billion at the meeting, which will enable it to raise more funds to finance its lendings.
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