Asian economies face the danger of meltdown unless
they coordinate policy responses to the global crisis more
closely, Japanese finance minister Kaoru Yosano warned
yesterday in Bali.
We need to be prepared for sudden shifts in the real
economy and swings in capital flows, Yosano cautioned.
Yosano announced $100 billion of Japanese bilateral aid to help
Asian countries cope with the crisis. This will take the form
of $60 billion of bilateral yen-swap liquidity plus a $38
billion contribution to the enlarged Chiang Mai Initiative and
500 billion yen of Japanese guarantees for Asian government
wishing to issue yen-denominated Samurai bonds in
The Japan Bank for International Cooperation will meanwhile
sign a memorandum of understanding with the ADB to coordinate
trade financing initiatives, Yosano said. Japan is offering $6
billion to help free seized-up trade financing facilities in
the region and the ADB is offering $1 billion which is hopes
will grow to $15 billion by catalysing outside money.
The Japanese finance ministers fears about continuing
fallout in Asia from the global crisis were echoed by
Indonesian finance minister Sri Mulyani Indrawati, who stressed
the dangers of capital flight and renewed
speculation against some Asian currencies.
Memories of 1997 are coming back, she said, even
though Asia has greatly improved its financial fundamentals
since the last Asian crisis. Fighting off spillover from a
global crisis which is not of their own making is one of
the most challenging tasks facing Asian policymakers at
present, Indrawati said.
Chinas deputy finance minister Li Yong also called for
increased regional cooperation in tackling the crisis. Asian
countries should work together to devise effective mechanisms
of financial cooperation and in promoting development, said
The need to rebalance demand in Asian economies between exports
and domestic consumption is emerging as major theme of the ADB
annual meeting. Financial leaders acknowledge that, unlike the
situation at the time of 1997 Asian crisis, countries cannot
hope to export their way out of trouble this
Yosano offered a partly dissenting view, however, during a
seminar on the global financial turmoil and its implications
for Asia. He agreed that it was necessary for Asian governments
to pump up domestic demand through fiscal stimulus
and other means but he insisted that exports will
continue to play a central role in Asias overall
He called on the ADB to redouble its efforts to help
Asian countries to become less vulnerable to fluctuations in
external demand. Asian economies need all the help they
can get to avoid meltdown, he added.