Asian nations set up $120 billion crisis fund

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Hong Kong: Thirteen East and Southeast Asian countries agreed yesterday to set up an emergency $120 billion fund to provide liquidity to any of them in need of help during the economic downturn, reports Reuters. Japan also unveiled a scheme to supply up to 6 trillion yen ($61.54 billion) to support nations hit by economic crisis.
The moves were announced on the sidelines of the Asian Development Bank's annual meeting on the Indonesian island of Bali. Under the plan, China and Japan would each contribute 32% to the regional fund, known as the Chiang Mai Initiative. South Korea would provide 16% while the rest would come from the 10-member Association of South East Asian Nations (ASEAN).
The fund is due to be launched before year-end and will give emergency balance of payments support in case any of the countries experienced the kind of capital flight that marked the Asian financial crisis of 1997/98.
"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.
"The deepening global economic downturn, coupled with heightened risk aversion in financial markets, (has) adversely impacted trade and investment in the region."
The ADB has forecast that Asian economies will grow only 3.4 percent in 2009, the slowest pace since the Asian financial crisis a decade earlier. It sees growth recovering to 6.3 percent next year.  [04/05/09]