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 Japan pledges $30 billion to aid Asian economies as G7 meets | |||||||||||||||||||||||||||||
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WASHINGTON (CNN) -- Japan pledged a $30 billion aid package on Saturday to promote economic stability among battered Asian nations, and Finance Minister Kiichi Miyazawa said the plan would also help revive the sluggish Japanese economy.
Miyazawa proposed the initiative at a meeting with the finance ministers of Indonesia, South Korea, Malaysia, the Philippines, Singapore and Thailand, in response to the economic turmoil that began sweeping through the six nations last year and now is spreading globally.
"I told them what we are trying to do for this initiative is not only for their economies, but also Japan's benefit, because, after all, Asian economies and Japan suffer exactly the same problems," Miyazawa said.
Miyazawa is in Washington to attend the annual meetings of the International Monetary Fund (IMF) and World Bank as well as a gathering of top financial officials from the Group of Seven (G7) top industrial nations.
Asian nations are suffering from high unemployment rates, falling corporate profits and difficulties in repaying mountains of private debts.
Japan accounts for roughly two-thirds of Asian economic output, and its economy slipped into recession this year.
"Unless Asian economies recover, we do not think the Japanese economy can recover. Unless the Japanese economy recovers, (it) won't be good for the recovery of Asian economies," Miyazawa said.
Boosting Japanese exports throughout the region, Miyazawa said, is the battery that will jump-start the economies.
Half of the $30 billion will go toward medium- to long-term financial recovery, with the rest set aside for potential short-term capital requirements as economic reforms are implemented, Miyazawa said.
The other Asian nations welcomed Tokyo's initiative and called for its early implementation.
"It's quite timely for Thailand because we believe ... we need to restimulate the domestic demand in view of the contracting economy," said Thai Finance Minister Tarrin Nimmanahaeminda.
"The best way to do that is actually to run deficits, and an even better way is to run deficits of external and long-term financing," Tarrin said. "So if the Miyazawa plan allows that kind of financing, and it seems to, it's exactly what we need," he said.
Miyazawa said he would hold "urgent bilateral talks" to implement the plan, following the annual meetings of the IMF and World Bank, which get under way Sunday.
He said all of the Asian countries involved agreed to seek the stability of foreign exchange rates for sustainable economic growth.
U.S. Treasury Secretary Robert Rubin approved of Japan's aid package, while also telling Miyazawa that Japan needs to work quickly to reform its bank system and revive its own economy, a White House spokesman said.
Rubin spoke with Miyazawa before Saturday's G7 meeting of finance chiefs from the United States, Japan, Britain, France, Canada, Germany and Italy, who gathered to discuss the global economic problems in advance of the IMF and World Bank meetings.
U.S. President Bill Clinton received support to reform the IMF on Saturday from British Prime Minister Tony Blair and French President Jacques Chirac, a White House spokesman said.
Clinton urged the IMF on Friday to change its procedures to provide emergency loans more quickly to countries facing economic difficulties. He said substantial support early could help avert the economic meltdowns that Asian nations and Russia have experienced.
Rubin and U.S. Federal Reserve Chairman Alan Greenspan are scheduled to lobby for the proposals at the G7 talks.
The IMF provided more than $100 billion in bailout funds to some of the countries facing economic difficulties, but critics have attacked it for failing to contain the crisis, which now threatens Brazil.
Rubin met Friday with Brazilian Finance Minister Pedro Malan, who has confirmed reports that Brazil is negotiating for a multibillion-dollar loan package from the IMF, the World Bank and private creditors.
Announcement of a $30 billion package is expected after Sunday's presidential election in Brazil, as the United States works with the IMF to keep the largest economy in Latin America from becoming the latest victim of the crisis, which began in Thailand 15 months ago.
Rubin said the United States would be pushing a number of proposals to the G7 finance ministers, but White House aides cautioned that some of the efforts were still preliminary and not likely to win approval during the IMF annual meeting.
Clinton scolded Congress on Friday for what he called the "inexcusable" delay in its approval of his request for $18 billion to replenish the IMF's depleted coffers.
A Russian delegation, in Washington to meet with IMF Managing Director Michel Camdessus and to attend part of Saturday's G7 meeting, will focus on restoring the confidence of Western investors rather than pushing for immediate payments from the IMF, a delegation member said.
Russia's economy has spiraled downward in recent weeks after the government defaulted on some foreign debts and devalued the ruble.
The banking system is close to collapse, and some officials have said Russia may resort to printing money if the IMF does not approve a new payment soon from a $22.6 billion rescue deal drawn up over the summer.
Finance Minister Mikhail Zadornov said Friday that Russia was counting on receiving $2.5 billion by the end of this year to help stabilize the economy.
The IMF, which paid $4.8 billion from the new international aid package in July, has held off making another payment until the Russian government comes up with a coherent economic program.
The second payment of $4.3 billion was originally scheduled for mid-September, to be followed by a $2.1 billion payment in November.
The Associated Press and Reuters contributed to this report.
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