La­garde woos SE Asia as re­gion cuts IMF re­liance

The Fund is seek­ing to main­tain its influence in re­gion that is help­ing global econ­omy

The Pak Banker - - Front Page -


Fresh from yet an­other meet­ing in Brussels on Europe’s debt cri­sis, In­ter­na­tional Mone­tary Fund Manag­ing Di­rec­tor Chris­tine La­garde Wed­nes­day kicked off a three- coun­try tour of South­east Asia, which is thriv­ing af­ter emerg­ing from tur­moil more than a decade ago.

Her week- long visit, which starts in Malaysia and in­cludes the Philippines and Cam­bo­dia, builds on ties that took years to mend af­ter the 1997 Asian fi­nan­cial cri­sis forced some coun­tries into un­pop­u­lar IMF aus­ter­ity poli­cies. Now the fund is seek­ing to main­tain its influence in a re­gion that is help­ing power the world econ­omy while re­duc­ing its re­liance on the IMF’s fi­nan­cial sup­port.

These coun­tries, which didn’t need IMF help dur­ing the global cri­sis of 2008, are build­ing up for­eign cur­rency re­serves and boost­ing re­gional al­liances to en­sure they can weather fu­ture shocks on their own, said Eswar Prasad, a for­mer head of the China division at the Wash­ing­ton-based lender.

“The main risk for the IMF is that it comes to be seen as less rel­e­vant to the re­gion, both in terms of the ad­vice it has to of­fer and in its role as provider of a fi­nan­cial safety net,” said Prasad, now a se­nior fel­low at the Brook­ings In­sti­tu­tion in Wash­ing­ton.

For La­garde, who spent most of her first 17 months at the IMF con­sumed by Europe’s debt cri­sis, the trip also shows ap­pre­ci­a­tion for the con­tri­bu­tion Malaysia and the Philippines made to a $461 bil­lion in­crease in the fund’s re­sources this year, when the US and Canada ab­stained.

The visit, which mixes meet­ings with of­fi­cials and busi­ness lead­ers, con­cludes Nov. 20 in Cam­bo­dia with the East Asia Sum­mit, where La­garde will join lead­ers of the As­so­ci­a­tion of South­east Asian Nations and other coun­tries, in­clud­ing newly re-elected US Pres­i­dent Barack Obama.

Her goal is to en­gage, lis­ten and ex­change views about the global econ­omy, Anoop Singh, who heads the IMF’s Asia-Pa­cific depart­ment, said in an in­ter­view.

Re­cent eco­nomic data have shown signs of re­cov­ery in Asia. South Korea’s un­em­ploy­ment rate fell to 3 per­cent in Oc­to­ber, the low­est in more than four years, amid a re­bound in the na­tion’s ex­ports and in­dus­trial out­put, a re­port showed to­day. Hong Kong may re­port faster year-on-year growth in the third quar­ter, ac­cord­ing to a sur­vey. The MSCI Asia Pa­cific In­dex (MXAP) rose 0.1 per­cent as in Tokyo, bring­ing this year’s gain to about 5.5 per­cent.

Aus­tralian con­sumer con­fi­dence surged to a 19-month high in Novem­ber, a West­pac Bank­ing Corp and Mel­bourne In­sti­tute sur­vey showed Wed­nes­day in Sydney. The coun­try’s wage price in­dex, which mea­sures hourly pay rates ex­clud­ing bonuses, ad­vanced 0.7 per­cent in the third quar­ter from the pre­vi­ous three months, the sta­tis­tics bureau said sep­a­rately.

In con­trast, euro-area in­dus­trial pro­duc­tion may have con­tracted in Septem­ber, ac­cord­ing to a sur­vey be­fore a re­port due to­day. Por­tu­gal may re­port a de­cline in gross do­mes­tic prod­uct in the third quar­ter to­day, a sep­a­rate sur­vey showed. In the US, a re­port may show re­tail sales fell in Oc­to­ber, a sur­vey of economists showed. In­dia’s bench­mark whole­sale-price in­fla­tion un­ex­pect­edly eased to an eight-month low of 7.45 per­cent in Oc­to­ber, ac­cord­ing to a re­port.

“Asia is now the global growth leader and you see how much many Asian coun­tries have im­proved the fun­da­men­tals over time,” Singh said. “There are clearly many lessons the world can learn from Asia.”

Some of those lessons have been learned by the IMF, which has changed its pol­icy pre­scrip­tions since the 1990s. It has mel­lowed its op­po­si­tion to cap­i­tal con­trols and eased its stance on aus­ter­ity mea­sures. It now sup­ports giv­ing Greece and Por­tu­gal, two coun­tries where it co-fi­nances bailouts, more time to meet bud­get deficit tar­gets.

“It is a very dif­fer­ent in­sti­tu­tion than it was 15 years ago,” said Joseph Stiglitz, the No­bel lau­re­ate and for­mer World Bank chief econ­o­mist who has said IMF poli­cies in Asia dur­ing the cri­sis deep­ened the re­gion’s re­ces­sion. “There is a frame­work for more open­ness,” he told re­porters in Sin­ga­pore last week.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.