PGMA, Thai PM confident of CMI's expansion OK at 14th ASEAN Summit in Thailand in December
Manila (12 November) -- President Gloria Macapagal-Arroyo and Thai Prime Minister Somchai Wongsawat expressed optimism for the approval of the proposed strengthening and expansion of the $84-billion Chiang Mai Initiative (CMI) during the 14th ASEAN Summit that will be held in Chiang Mai, Thailand in December.
The two leaders, in their separate statements before the Malacanang gala dinner tendered Monday night by the President for the visiting Thai PM, agreed that a concerted effort of the 10-member Association of South East Asia Nations and their dialogue partners China, Japan and South Korea (ASEAN+3) is important for the region to withstand the effects of the current global financial crisis.
"We are very pleased, Your Excellency, that under your leadership, we are strengthening the Chiang Mai Initiative to a large and quick-disbursing fund for liquidity," the President said.
"I thank Your Excellency, President Arroyo, for your initiative to convene the ASEAN +3 to discuss the current financial crisis on the sideline of the 7th ASEM in Beijing," said the Thai PM as he invited the President to participate in the 14th Association of Southeast Asian Nations (ASEAN) Summit this December.
At the same time, PM Somchai -- who was here Monday (Nov. 10) for a brief seven-hour visit -- thanked the President for offering to host the High Level Meeting on the Financial Crisis on Nov. 20.
During their bilateral meeting, the two leaders also discussed ways to further strengthen bilateral relations between the Philippines and Thailand.
President Arroyo congratulated Somchai, a brother-in-law of deposed Thai Prime Minister Thaksin Shinawatra, for his nomination by Thailand's governing party, the People Power Party, and for becoming the prime minister-elect last September after a court forced his predecessor, Samak Sundaravej, to step down.
The two leaders also look forward to the 60th relationship anniversary between Thailand and the Philippines next year as they both vowed to further strengthen cooperation in trading, investment, the Thailand-Philippines Tourist Package, energy, and the military.
The two South East Asian nations formally established diplomatic relations on June 14, 1949 with the signing of the Treaty of Friendship in Washington, DC.
Since then, the countries have enjoyed cordial relations, and cooperation between them has been wide-ranging. Various bilateral agreements have been concluded, ranging from economic cooperation to extradition, to tourism cooperation.
Upon the initiative of the President, the ASEAN +3 -- at the breakfast meeting convened before the formal opening of the 7th Asia-Europe Meeting in Beijing last month -- agreed to expand the existing bilateral foreign currency swap framework that was earlier set up to assist any member that may experience liquidity problems amid the spreading global financial crisis.
The ASEAN +3 agreed to increase the CMI but they will still discuss the details. A technical working group composed of finance ministers and central bank governors has been designated to map out guidelines.
In that same Beijing meeting, the Asian leaders discussed the possibility of elevating the Chang Mai Initiative from a bilateral swap arrangement into a multilateral scheme to include all liquidity problems, including support for beleaguered financial institutions.
The original agreement is limited to providing emergency liquidity only in case of a foreign exchange crisis.
Also in that meeting, Thailand suggested that the fund be increased from $84 billion to $250 billion.
The leaders agreed to wait for the recommendations of the technical working group which will be submitted in December at the ASEAN Summit in Thailand.
The President advocated quick disbursement of the funds with minimum conditionality to countries that would need the funds, proposing that the expanded standby fund be called "Chiang Mai Initiative 2."
Under the Chiang Mai Initiative, a country experiencing conditions similar to the 1997 Asian financial crisis could borrow foreign currency from another country to augment its foreign reserves until the crisis is over. This would enable countries vulnerable to a financial crisis to access the funds in a foreign reserve pool without seeking assistance from lenders like the International Monetary Fund. (PIA-MMIO) [top]