Asean and East Asian finance ministers Thursday agreed to double their emergency reserve pool to US$240 billion to better prepare for any economic crisis.
"The credit line has been expanded to $240 billion from the previous agreement of $120 billion, with the lion's share of contributions made by the three giant economies - China, Japan and South Korea," Thai Finance Minister Kittiratt Na-Ranong said on the sidelines of the 45th annual meeting of the Asian Development Bank's board of governors.
Finance ministers from the 10-member Asean, and China, Japan and South Korea issued a joint statement on the emergency pool after the ministers' meeting in Manila, running parallel with the ADB's annual meeting, said Kittiratt, who is also a deputy prime minister.
Member countries could ask for emergency loans to beef up their international reserves to avert an economic crisis, such as what happened in 1997 when massive capital outflows from Thailand triggered the Asian financial crisis. Several countries were forced to ask for assistance from the International Monetary Fund (IMF).
The credit line, known as the Chiang Mai Initiative Multilateralisation currency-swap arrangement, will complement the IMF and credit will be extended even before a crisis hits, he said.
"If there's a sign of economic trouble, a member could ask for a bail-out from the new credit line without having to go to the IMF," he said.
In case of a serious crisis, members, however, may also need to ask for help from the IMF and they must follow the IMF's conditions, such as implementing austerity measures.
The global economy is still suffering from the sovereign debt crisis in Europe, but the US economy is showing signs of improving.
Kittiratt said he also met with the Asian Development Bank to discuss the bank's role in assisting Laos, Cambodia, Vietnam and Myanmar with their infrastructure projects that link them to Thailand.
The government next month is going to draw down $100 million from the ADB's $300-million loan package for economic restructuring after already using $200 million, he said.
Asean ministers and the ADB also discussed about the operation of the Asean Infrastructure Fund (AIF). The $485-million fund is expected to provide loans for infrastructure projects in the region this year.
Areepong Bhoocha-oom, permanent secretary for finance, said the AIF in the first three to five years would provide support to projects run by governments. After that it would consider extending loans to privately run projects.
The interest rate is expected to be slightly higher than Libor - the London Interbank Offered Rate.
Indonesia and Malaysia have already submitted several projects for AIF financial assistance. However, the Thai government has yet to propose any project.
In the future the AIF would sell its bonds to central banks in the region as part of fund-raising and tap the vast foreign reserves in the region for investment here.
The AIF will be managed by the ADB.
Thailand also discussed with the ADB a five-year plan of cooperation in five areas - capital markets, banking, infrastructure, micro-finance and insurance, he added.