Plan for Asia crisis fund failed
After the idea of creating a European bank bailout fund, to work together to support financial institutions, failed, There was an attempt by Asian economies led by members of Association of Southeast Asian Nations (ASEAN) to form a combined bail out fund for a coordinated response to the financial crisis. But The World Bank has refused to inject any kind of money in the venture.
THE World Bank on Thursday denied plans to commit funds for South-east Asian countries who may suffer liquidity problems from the continuing financial crisis, a day after the Philippine president announced the initiative.
President Gloria Macapagal Arroyo said finance officials from the 10-member Association of Southeast Asian Nations and their partners from Japan, China and South Korea agreed in Washington to set up a regional fund, with the World Bank committing US$10 billion (S$14.8 billion).
But in a statement in Washington, Mr Jim Adams, the World Bank's vice-president for East Asia and the Pacific, said the bank did not anticipate the establishment of such a fund and has not 'discussed commitments of funds at the regional level'.
'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.
Mr Adams confirmed that numerous discussions with individual governments were held during the recent Annual Meetings of the World Bank and the International Monetary Fund, and the institutions 'stand ready to support all of our member countries across East Asia to deal with the challenges arising from the financial crisis'.
He said that bank's private sector arm, the International Finance Corporation (IFC), was considering setting up a US$1 billion special fund to recapitalise small to medium-sized banks in poor countries with insufficient government capacity.
He said IFC may raise another US$2 billion or more.
Philippine government officials did not immediately return calls seeking comment on Mrs Arroyo's statement.
Mrs Arroyo said on Wednesday the Philippines was not among the affected countries, but did not say which ones may be using the fund.
Despite setback from the World Bank, President Arroyo is not giving up and have reiterated that the ASEAN plus 3 grouping would hold a meeting on the sidelines of the Asia-Europe summit in Beijing next week to discuss how the crisis was affecting the region.