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Japan announces 30 bil. dlr aid package for Asia.

WASHINGTON, Oct. 3 Kyodo Japanese Finance Minister Kiichi Miyazawa on Saturday announced a 30 billion dollar aid package for four ailing Asian economies to help them get on a growth track and resolve the Asian financial crisis. Miyazawa and Bank of Japan Governor Masaru Hayami unveiled the plan when they met with finance ministers and central bank governors from the five original Association of Southeast Asian Nations (ASEAN) members and South Korea. At the opening of the meeting, Miyazawa told the Asian officials, "The package is intended to prevent a deflationary spiral in Asia and achieve the region's early economic recovery." "Exchange markets in Asia have stabilized and foreign-currency reserves have been recovering, but what is to be really overcome now is slack growth rates and sluggish corporate revenues," Miyazawa said. A joint statement issued after the meeting said the balance of risks

in the world economy has shifted from inflation to recession. "To overcome the current economic difficulties, while avoiding the risk of falling into deflationary spiral, they agreed that it is imperative for the Asian countries to take stimulus measures to put their economy on the path of recovery and sustainable growth," the statement said. The statement also said the stability of exchange rates continues to be important for stable and sustainable economic development. The Japanese and other Asian top financial officials -- from Singapore, the Philippines, Malaysia, Thailand, Indonesia and South Korea -- also agreed to cooperate in promoting corporate and financial sector restructuring. They also confirmed the need for increasing private capital flow to Asian countries, and agreed social safety nets should be established in emerging economies to ease the plight of socially vulnerable people. These Asian officials got together in the U.S. capital to discuss ways to alleviate the Asian financial crisis, which first erupted in Thailand in the summer of last year and spilled over to the entire region. The conference took place at a Washington hotel just before a semiannual meeting of top finance officials of the Group of Seven (G-7) industrial countries. The Japanese aid program calls for the Export-Import Bank of Japan to guarantee the debts of three hardest-hit Southeast Asian nations -- Thailand, Indonesia and Malaysia -- and South Korea. The plan will also enable the bank to purchase public bonds from these countries and pay the interest on loans made to them to help them raise funds. The plan is meant to encourage the restructuring of private companies, expedite a cleanup of bad loans, set up social safety nets for the poor and ease credit crunch in the troubled countries. Miyazawa told the Asian officials that half of the 30 billion dollars is intended to meet needs for short-term capital, such as trade finance, in the course of economic reform. The remaining 15 billion dollars will be made available for medium- and long-term financial needs for economic recovery in the entire Asian region, Miyazawa told a news conference after the meeting. Japan intends to cooperate closely with multilateral development banks and related countries, especially Asia-Pacific and G-7 countries, in implementing the new initiative, he said. Miyazawa said Japan has no immediate plan to transform the 30 billion dollar disbursement plan into an Asian currency fund as proposed during last year's G-7 financial meeting in Hong Kong. "But I would be happy to see such an evolution happen in the course of implementing the plan," he said. International Monetary Fund Managing Director Michel Camdessus welcomed Japan's initiative earlier this week. U.S. Treasury Secretary Robert Rubin labeled the package "constructive" in easing Asia's plight at a press conference Friday. But he added the package should not help distract attention from the need for Tokyo's maximum efforts to get bank on a growth track.
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Publication:Asian Economic News
Geographic Code:90ASI
Date:Oct 5, 1998
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