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RI to secure reserve funds from ASEAN+3

Indonesia, along with other members of ASEAN, will this weekend seek the formalization of a multi-billion dollar ASEAN+3 cooperation fund aimed at bolstering foreign exchange reserves — the first concrete joint action in Asia to cope with the global economic downturn

Aditya Suharmoko (The Jakarta Post)
JAKARTA
Fri, February 20, 2009

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RI to secure reserve funds from ASEAN+3

Indonesia, along with other members of ASEAN, will this weekend seek the formalization of a multi-billion dollar ASEAN+3 cooperation fund aimed at bolstering foreign exchange reserves — the first concrete joint action in Asia to cope with the global economic downturn.

Under the framework of the Chiang Mai Initiative Multilateralization scheme, ASEAN members and Japan, China and South Korea (or ASEAN+3)  will create a pool amounting to US$84 billion which will later be accessible to members to boost their forex reserves.  

There have been talks however that the funds could be increased to as much as $120 billion.

Finance Minister Sri Mulyani Indrawati is set to lead the Indonesian delegation in the meeting to be held in the Andaman Sea resort of Phuket in Thailand.

The meeting will be attended by finance ministers of the 10 members of the Association of Southeast Asian Nations — the Philippines, Indonesia, Thailand, Malaysia, Singapore, Brunei, Vietnam, Myanmar, Cambodia and Laos — as well as three East Asian nations — Japan, China, and South Korea.

The Finance Ministry’s head of fiscal policy Anggito Abimanyu said Thursday the meeting would discuss the setting up of the Chiang Mai Initiative, which would help increase Indonesia’s foreign exchange reserves to counter the impact of the global economic slowdown.

China, Japan and South Korea will contribute 80 percent of the fund as they have much larger reserves, while the remaining 10 countries will contribute the rest.

“The existing amount is around $80 billion. It depends on the meeting whether the amount

will be raised to a certain figure,” said Anggito.

He added that the finance ministers would also discuss establishing an independent surveillance body to oversee the pooled funds,and to raise the percentage of disbursed funds.

“Now the percentage is 20 percent. It is planned to be raised,” he said. A higher percentage means a member country can attract more funds to add to its foreign exhange reserves should the country be hit hard by the global downturn.

With the Chiang Mai Initiative, Indonesia will be able to get more funds to help the country cope with the global financial crisis. Latest central bank data shows Indonesia’s foreign exchange reserves currently stand at $50.87 million.

Mulyani said earlier that several multilateral agencies and countries were committed to providing $6 billion in standby loans for Indonesia.

The World Bank is providing $2 billion, the Asian Development Bank $1 billion, the Islamic Development Bank between $500 million and $1 billion, Japan $1 billion and Australia $1 billion.

ADB president Haruhiko Kuroda is expected to attend the ASEAN+3 meeting in Phuket.

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