ASEAN’s AMRO may ‘replace’ IMF financial role
After two years of preparation, the ASEAN+3 Macroeconomic and Research Offices (AMRO) will start operation early in May this year to perform surveillance functions in the region.
Bambang Brodjonegoro, the Indonesian Finance Ministry’s fiscal policy office acting chief, said Thursday that deputy finance ministers of the Association of the Southeast Asian Nations (ASEAN) member countries had recently agreed to launch the operation of AMRO on May 1.
“AMRO will become a body that will supervise financial development in the region and provide early warnings if a member country needs support,” Bambang told reporters on the sidelines of the ASEAN Finance Ministers Meeting in Nusa Dua, Bali.
“AMRO will give recommendations after receiving a request from that country.”
AMRO members comprise 10 ASEAN member countries (Indonesia, Malaysia, Singapore, Thailand, the Philippines, Myanmar, Vietnam, Laos, Cambodia, Brunei Darussalam) and the plus three nations (Japan, China, South Korea).
AMRO, which will function like the International Monetary Fund (IMF), will perform a key regional surveillance function as part of the US$120 billion Chiang Mai Initiative Multilateralization (CMIM) currency swap facility, which was established by ASEAN+3 finance ministers and central bank governors in December 2009.
“AMRO is kind of the first line of defense for Southeast Asia.
“If financial disruption is considered too massive, it will step in,” Bambang said, adding that the headquarters of the regional surveillance body would be in Singapore and chaired by Japan and China.
On one level, the role of AMRO is like that of the IMF.
IMF’s financial support and bailout package given to a number of Asian countries including Indonesia to cope with the financial crisis in the region in 1998 has been widely criticized.
Critics said that many of the agency’s reform programs given as part of the aid package had failed to deal with the crisis.
The regional surveillance role for the CMIM was previously handled by the Asian Development Bank and ASEAN’s secretariat. But the recent establishment of AMRO will take over the surveillance role for the use of CMIM funds.
“AMRO will identify and recommend how much in funds a country will need to take out from the CMIM in times of financial disruption,” Bambang added.
South Korea contributed $19.2 billion or 16 percent of the $120 billion fund. China and Japan each provided 32 percent, while ASEAN members the other 20 percent.
Indonesia, Malaysia, Thailand and Singapore respectively contributed $4.77 billion into the CMIM liquidity protection fund, while the Philippines stored $2.68 billion.
The five countries are allowed to borrow 2.5 times their funding contribution at times of crisis using the CMIM funds.
ASEAN members, Japan, China and South Korea previously proposed the establishment of the Asian Monetary Fund (AMF) to support the CMIM financial initiatives.
The plan, however, was later dropped.