Asia and the IMF
Asia and the IMF
Asia is rising. Given the region’s importance, its voice on the global stage is growing. Relations between Asia and the IMF are also being revitalized. Both the Fund and the region have drawn lessons from the Asian Financial Crisis and are seeking to forge a partnership which will build on the region’s economic success and resilience.
Asia’s Growing Influence
Asia is set to become the largest economic region in the world over the next two decades. According to IMF forecasts, by 2030, Asian gross domestic product (GDP) could exceed that of the Group of Seven (G-7) major industrial economies. The speed of that growth, and Asia’s recovery from the most recent global crisis, underlines its increasing success. Asia is emerging from the recession with its standing in the world strengthened.
Given its rise as an economic powerhouse, it is natural that Asia’s voice should become increasingly influential in global economic and financial discourse. This trend is already under way. Six of the Group of Twenty (G-20) major industrialized and emerging market economies are from the Asia-Pacific region. Asia holds just over 20 percent of the IMF’s voting shares, and that figure is set to rise with the commitment by G-20 leaders in 2009 to increase IMF quota shares of dynamic emerging markets and developing economies.
Wide-ranging IMF quota and governance reforms are scheduled to be completed by January 2011. These reforms will benefit Asia, bringing the region’s representation at the IMF more closely in line with its position in the world economy.
Asia’s increasing influence is also being reflected in the composition of IMF staff and at the very top of the organization. One of the three Deputy Managing Directors of the organization, Naoyuki Shinohara, comes from Japan; and the former Deputy Governor of China’s central bank, Min Zhu, was recently appointed as special advisor to the Fund’s Managing Director.
Key aspects of Fund Engagement
The IMF is investing in its long-term partnership with Asia. The recent global crisis and reforms underway at the IMF illustrate that the Fund has much to offer the region. Benefits include:
- Economic monitoring and advice: Monitoring the economic and financial policies of its member countries—known as surveillance—is the core business of the IMF. The global crisis has underlined the importance of looking at economic policies and conditions both in individual countries, but also for groups of countries and the whole world. Currently, the IMF’s surveillance work is being enhanced to include a stronger regional focus—of particular value to Asia. Every six months the IMF publishes its regional economic outlook for Asia. By focusing more on vulnerabilities and possible spillovers, IMF surveillance can provide a global perspective and help deepen individual country or regional analysis. By working in cooperation with Asia and other country groups, the IMF can help form a more effective network of peer assessment, such as the G 20 Mutual Assessment Process. Asia is also playing an important role in the Fund’s Financial Sector Assessment Program—a voluntary, comprehensive and in-depth analysis of a country's financial sector, established in 1999. To date, more than three-quarters of the IMF’s member countries have undergone assessments, including major Asian economies.
- Technical assistance and training: IMF technical assistance supports the development of a country’s productive resources by helping it to effectively manage its economic policy and financial affairs. The IMF has increasingly adopted a regional approach to the delivery of technical assistance and training. As well as providing technical assistance to individual countries, it operates seven regional technical assistance centers, including one in the Pacific—the Pacific Financial Technical Assistance Center—which delivers capacity-building technical assistance and training to 15 Pacific island countries. The IMF also runs regional training programs in China, India, and Singapore, and also has a major regional office in Tokyo.
- Resources: As part of its efforts to support countries during the global economic crisis, the IMF beefed up its lending capacity and is continuing to look at ways to improve how it lends money. It now offers higher amounts and tailors loan terms to countries’ varying strengths and circumstances, with greater care for the most vulnerable. Leaders of the G-20 countries recently backed a tripling of the IMF’s lending capacity to $750 billion to support its ability to combat financial contagion. Also, building on recent experience of lending in cooperation with partners in Europe, the IMF is exploring the scope for greater collaboration with regional financial arrangements including in Asia.
- Sharing of knowledge: Asia will need to build on its robust policy foundation to address the challenges it still faces in both the near and the long term. The IMF can help in that process. Leveraging its know-how acquired across many countries and regions, the Fund can assist in that process of change and more generally in the smooth integration into the global economy. In return, the IMF can benefit from a dialogue with Asian member countries, including how best to work with regional institutions.
Lessons from the Asian crisis
The crisis that several Asian economies faced in 1997–98 was severe and many people in the region endured considerable distress. The large amounts of financing provided by the IMF and others during the crisis provided the breathing room needed for many of their governments to undertake deep and painful reforms. Many of these same economies have performed remarkably well since then. Asia’s resilience following the more recent global crisis is testament to the enduring, and often difficult, reforms undertaken over the past decade.
The IMF learned important lessons from the Asian crisis. In particular, the Fund recognizes that while tough measures are needed to address deep economic problems, the conditions accompanying its programs need to be more focused on the problems at hand, and it needs to be more conscious of the social impact of those programs. The IMF has sought to apply this and other lessons to its more recent lending programs. The example of Asia’s resilience during the current crisis and the examples of good practice from the region have helped inform IMF advice to other member countries.
The future for Asia and the IMF
The commitment of major Asian countries to the IMF was highlighted during the global financial crisis. Several Asian countries agreed to bolster the Fund’s lending capacity. Japan was the first, providing $100 billion to the IMF. It was quickly joined by Korea, China, India and Singapore. In addition, India also helped boost the Fund’s concessional lending capacity last year when its central bank purchased 200 metric tons of IMF gold.
The IMF is committed to creating a closer dialogue and two-way engagement with Asia. As part of that commitment, last year the IMF’s Asia and Pacific Department established a regional advisory group made up of renowned economic experts from Asia. This group provides the Fund with advice on its policies impacting the region. Another part of that engagement involves increasing the IMF’s presence in the region, including through Resident Representative offices, and hosting regional conferences with regional partners (e.g. through the Developing Asia conference in Hanoi March 2010 and during the “Asia 21” conference in the Korean city of Daejeon in July 2010). A major aim of this engagement is to build--through dialogue and a shared vision--sustained economic growth in Asia and the world.
Asian Program Countries
Nepal: Rapid Credit Facility (RCF)
IMF Executive Board Approves US$ 42.05 Million Disbursement Under Rapid Credit Facility for Nepal
Press Release No. 10/219
May 28, 2010
Maldives: Stand-by and ESF Arrangements
IMF Executive Board Completes First Review Under Stand-by and ESF Arrangements with Maldives, and Approves US$7.8 Million Disbursement
Press Release No. 10/118
March 26, 2010
IMF Executive Board Approves US$79.3 Million Stand-By Arrangement and US$13.2 Million Arrangement Under the Exogenous Shocks Facility for Maldives
Press Release No. 09/444
December 4, 2009
Mongolia: Stand-by Arrangements
IMF Executive Board Completes Fourth Review Under Stand-By Arrangement with Mongolia and Approves US$23.4 Million Disbursement
Press Release No. 10/99
March 19, 2010
Samoa: Exogenous Shocks Facility
IMFStaff Report: Samoa: Request for Disbursement Under the Rapid-Access Component of the Exogenous Shocks Facility - Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Samoa
IMF Executive Board Approves US$9.3 Million Disbursement for Samoa Under the Exogenous Shocks Facility
Press Release No. 09/446
December 7, 2009
Solomon Islands: Standby Credit Facility
IMF Executive Board Approves US$18.3 Million Standby Credit Facility Arrangement for the Solomon Islands
Press Release No. 10/223
June 2, 2010
Sri Lanka: Stand-By Arrangement
Statement at the Conclusion of the IMF Staff Mission to Sri Lanka
Press Release No. 10/207
May 21, 2010
Statement at the Conclusion of an IMF Staff Mission to Sri Lanka
Press Release No. 10/63
February 25, 2010
Statement at the Conclusion of an IMF Staff Mission to Sri Lanka
Press Release No.09/443
December 4, 2009
IMF Executive Board Completes First Review Under Stand-By Arrangement with Sri Lanka and Approves US$329.4 Million Disbursement
Press Release No. 09/395
November 6, 2009
- Build a shared vision to support sustained economic growth in Asia, while drawing lessons from the past in a candid and constructive manner;
- Showcase Asia’s success in economic management, and highlight lessons for other regions;
- Examine Asia’s growth model, its prospects going forward, and the implications of change for the global economy;
- Discuss Asia’s role in the international community, including the IMF, in this process.
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