The World Bank pledged on Wednesday to help Asian nations hit by financial turmoil, but ruled out immediate prospects for a funding facility for Southeast Asia to cope with the crisis.
“We stand ready to support all of our member countries across East Asia to deal with the challenges arising from the financial crisis,” said Jim Adams, the World Bank’s East Asia and Pacific regional vice president.
He said however the bank did not expect a regional fund to be set up for the purpose following a statement by Philippine President Gloria Arroyo that a “standby facility” would be established to help Southeast Asian nations in need of cash.
Arroyo had said in Manila on Wednesday that East Asian finance ministers “reached an understanding to establish” the facility during talks last week on the sidelines of the annual meetings of the IMF and World Bank in Washington.
She said the World Bank had “indicated” it would commit funds to the facility following global turmoil sparked by a US mortgage crisis. One news report quoted her as saying the bank would provide US$10 billion.
“While we do not anticipate the establishment of a regional facility and have not discussed commitments of funds at the regional level, numerous discussions with individual governments were held” at the meetings, Adams said.
The talks were “on the impacts of the financial crisis and possible ways we might be able to provide support at the country level,” he said.
The World Bank, Adams said, was supporting initiatives of ASEAN members to share information and develop a “coordinated response” to the financial crisis.
Aside from the Philippines, ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand and Vietnam.
The region was embroiled in a serious financial crisis in 1997 to 1998 and some countries had sought IMF and World Bank help.
Although reforms in East Asian economies resulting from the crisis a decade ago made them more resilient to the impacts of the current global turbulence, they must be prepared to deal with any effects of the turmoil, Adams said.
The IMF said separately on Wednesday that it “supports the efforts of the ASEAN countries to strengthen regional cooperation to promote economic and financial stability.”
“While we see Asian economies as being well positioned to weather the current turmoil in financial markets, the IMF stands ready to provide funding quickly to its members who might need liquidity support,” a fund spokeswoman said.
“The fund will also be closely engaged in the discussions among the countries and multilateral institutions on the crisis response,” she said.
The World Bank also said on Wednesday that it had the financial capacity to “comfortably double” its middle-income lending arm to developing countries in case of any additional demand because of the turmoil.
Lending under the International Bank for Reconstruction and Development was US$13.5 billion last fiscal year.
The World Bank said its private sector arm, the International Finance Corporation (IFC), was considering setting up a special fund that would provide equity to recapitalize small to medium-sized banks in poor countries with insufficient government capacity to help inoculate them from the global turmoil.
The IFC, it said, might contribute around US$1 billion and seek to raise another US$2 billion or more from sources such as commercial banks.
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