Widening of Chiang Mai Initiative
Posted in General,Guide,News February 24, 2009At a summit held on Sunday in Phuket, Thailand, finance ministers from China, Japan, South Korea and the 10 Asean states agreed to create a $120 billion foreign exchange reserve fund to help the members save their currencies from speculative attacks, and also to provide them with emergency short-term financing. The pool was supposedly planned for $80 billion in May but has turned out to be 50% larger than what was planned. The scheme is also a widening of the so-called “Chiang Mai Initiative”, which was launched at the beginning of the decade.
China, Japan and South Korea will supply about 80% of the pool, while the individual contributions of the Asean countries will probably be decided at the next meeting in May.
Meanwhile, bilateral agreements will continue and are being strengthened. On February 21, Japan and Indonesia increased the size of an existing bilateral agreement to $12 billion from $6 billion.
Speculative attacks and capital flight devastated the foreign exchange reserves of Indonesia, Korea and Thailand during the Asian financial crisis a decade ago, prompting recourse to loans by the International Monetary Fund and hence the imposition of IMF “conditionality”.
As a result, the Asian governments decided to build up their foreign exchange reserves, sustained by the revenues from export-oriented economies. And in the past 10 years, the 13 Asian countries have built up more than $3.5 billion of foreign exchange reserves. A large chunk of that is held by the People’s Bank of China, of course, but the total makes up nearly half of the world’s total foreign exchange reserves.
Comments 0Thailand’s economy shrinks with slump in GDP and exports
Posted in General,Government,Guide,News February 24, 2009With a slump in tourism and exports, Thailand’s economy contracted 4.3 percent in the three months ended Dec. 31 from a year earlier, and may shrink by at least that much in the first quarter. With a dwindle in demand for its agricultural products, automobiles and electronics, Thailand is steadily heading towards recession following its neighbors Singapore, Taiwan, Hong Kong and Japan.
PM Abhisit Vejjajiva has promised immediate cash handouts and long-term infrastructure projects to stem the economy’s slide. “The economy will face a very hard time in the first half of this year,” Abhisit said today in Bangkok. “I’m confident that the government’s spending will help the economy rebound in the second half.” GDP may shrink in the first six months of 2009 before picking up in the second half, he said last week.
Thailand’s SET Index of stocks fell 0.6 percent as of 11:49 a.m. in Bangkok. The decline in gross domestic product was the largest since the fourth quarter of 1998 and may shrink as much as 1 percent this year, the first annual contraction in 11 years, as predicted by the government’s National Economic & Social Development Board.
The finance ministry forecasts a budget deficit of 349.5 billion baht in this fiscal year ending Sept. 30. The shortfall for the year starting Oct. 1 may widen by 12 percent as the global recession crimps revenue, Duangsmorn Warrarith, a deputy director of the Budget Bureau, said Feb. 17.
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