|Gamani Corea says there is merit in an Asian monetary fund
UNITED NATIONS, Nov 2 -- Dr. Gamani Corea, a former Secretary-General of the U.N. Conference on Trade and Development (UNCTAD), says that if the necessary funds can be raised, there is a case for an Asian Monetary Fund-- to be set up on the lines of the International Monetary Fund (IMF) -- to help Asian countries tide over currency crises. "The feasibility of the concept will depend on the availability of funds," he said in an interview with the JOURNAL OF THE GROUP OF 77.
Excerpts from the interview:
JOURNAL: With the current turmoil in currency markets in Southeast Asia, do you think it is feasible that Asia should have its own version of an International Monetary Fund (IMF)?
COREA: The feasibility of the concept will depend on the availability of funds. If these were available I would say there is merit in a regional institution for Asia that could supplement the short term support facilities of the IMF and reduce the need for corrective actions that could be excessively contractionary simply because of the inadequacy of supportive funding.
JOURNAL: Malaysian Prime Minister Mahathir Mohamad has said the financial crisis in Malaysia and Thailand-- caused mostly by currency speculation-- is an attempt by western nations to destabilise Southeast Asian economies. Is there any validity to this charge? And is this one of the negative spillovers from globalisation?
COREA: I do not have the knowledge to comment on motives. But certainly the massive movement of funds across borders for investments in financial assets has been a feature of "globalisation" and the rapid improvement in communications technologies that has accompanied it. As we have seen, this can have both positive and negative consequences. As for the negative fall outs these can have, as we have witnessed so many times in recent years, highly disruptive consequences for developing countries. I am not convinced that the developing countries should remain bereft of suitable defensive mechanisms simply in the name of "liberalisation". This is an area for study and for evolving policies.
JOURNAL: Last month the new British Government cancelled the debts of some 18 Least Developed Countries (LDCs) in the Commonwealth. Could this be the beginning of a new trend and how far has it gone to resolve the Third World debt problem?
COREA: The British initiative is certainly commendable. It reminds me of a similar action spearheaded by Britain around 1978 following a Ministerial meeting of UNCTAD's Trade and Development Board - the only one of its kind, I believe, and at which the British Minister at the time, Mrs. Judith Hart, played a leading part. A number of developed countries wrote off the official debts due to them from the "poorer" countries. More recently, an expert group on Third World debt set up by Indonesia during its presidency of the Non-Aligned Movement (NAM) pointed to the large number of developing countries that had fallen into arrears in respect of their debt servicing. For them debt reduction rather than debt rescheduling was needed. But it is not only official debts that need to be scaled down. Corrective actions must also reach out to debts owed to private creditors and to the multilateral financial institutions. There has been some movement on the debt issue in recent times but I have the impression that the scale and spread of the action taken so far remain inadequate.
JOURNAL: With the trend towards globalisation and free market economies-- and with the United States As the only superpower dictating market forces-- do you think the Group of 77 still wields any clout internationally? If not, how should it reorient itself to meet the new global challenges?
COREA: Recent global developments - economic, political and institutional - have, in many ways, had an unfavourable impact on the Group of 77 and on its effectiveness in international fora. I believe that the Group has to respond to this by enhancing its cohesiveness and by vastly strengthening its substantive platform. Many of its earlier goals remain valid but these need to be set in the context of a vastly changed situation and extended to embrace a number of new issues that have arisen. A challenge that faces the Group is that of organising the substantive work on issues that is now called for. Without an effective platform of its own to present to the international community for discussion and negotiation, the Group's responses would tend to be reactive to initiatives from outside and to be focused largely on damage limitation.