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Asia establishes $120bn crisis fund

Posted by seumasach on May 4, 2009

The ministers tried to deflect speculation that the fund’s aim was to circumvent the International Monetary Fund (IMF) so countries would not be forced to make unpopular economic reforms, as happened in the late 1990s. Rajat Nag, managing director general of the ADB, denied this was “a substitute for the IMF”.

Happily, this denial lacks all credibility

Thirteen Asian countries have agreed to set up a $120bn (£80.5bn) crisis fund to boost liquidity and overcome the economic crisis.

Telegraph

3rd May, 2009

Finance ministers of the 10-member Association of Southeast Asian Nations (ASEAN), alongside China, Japan and South Korea, unveiled the deal in Indonesia, where they were attending the annual meeting of the Asian Development Bank (ADB). The scheme is known as the Chiang Mai Initiative, or CMIM.

“We are pleased to announce that we have reached agreement on all the main components of the CMIM and decided to implement the scheme before the end of the year,” the ministers said in a joint statement.

The two largest donors will be Japan and China, with a $38.4bn contribution. Hong Kong will give $4.2bn as part of China’s share. The next largest contributor is South Korea, at $19.2bn.

Indonesia, Singapore, Malaysia and Thailand will each provide $4.77bn.

The ministers tried to deflect speculation that the fund’s aim was to circumvent the International Monetary Fund (IMF) so countries would not be forced to make unpopular economic reforms, as happened in the late 1990s. Rajat Nag, managing director general of the ADB, denied this was “a substitute for the IMF”.

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