You know it's an Asian financial crisis redux--or worse--when former IMF Managing Director Michel Camdessus makes a reappearance on the world stage. Only yesterday, Asia's regional development lender, the Asian Development Bank (ADB) held a conference in its Manila headquarters discussing steps to cope with the crisis. Camdessus probably agreed to appear since the meeting was in Manila instead of Djakarta, where he remains a controversial figure due to the IMF's handling of Indonesia's crisis all those years ago. Now, the man who oversaw the IMF at the height of its Washington Consensus agenda is looking to Asian to take the lead. From ABS-CBN News:
To recover from the ongoing economic crisis and to prevent it from happening again, the world should make way for a new architecture of global governance, the former chief of the International Monetary Fund (IMF) said Monday. Speaking at a forum organized by the Asian Development Bank (ADB), former IMF Managing Director Michel Camdessus said the key building blocks for such reform include a “brand new IMF” and a more inclusive global governance group “to replace all the key ‘Gs’” such as the G-8 and the G-20.At the same meeting, current ADB head Haruhiko Kuroda echoed calls elsewhere for increased funding for during a time of crisis to help Asian LDCs coming under duress:
“This is the most effective way to prevent the recurrence of crises…To hesitate to adapt to this reform is to accept that the same causes can lead to the same or worse crises,” Camdessus told reporters and finance ministers at the ADB headquarters in Mandaluyong City.
The G-8 (Group of 8) is a forum of the world’s most industrialized democracies which was formed to respond to the global recession. Its member states include Canada, Germany, France, Japan, Italy, Russia, the United States, and the United Kingdom. On the other hand, the G-20 (Group of 20 Finance Ministers and Central Bank Governors) is composed of the world’s 20 largest national economies, including the G-8. The group serves as a forum for consultation on global financial concerns.
According to Camdessus, emerging countries, particularly Asia, should be at the helm of this proposed architecture. He said Asian nations should be more properly represented, adding that they should “take advantage of the power they hardly recognize to change the world. Asia must be in the driving seat, or at least share it with key international centers of the world…This is the hour of Asia,” he said.
In a study, the ADB said “over-represented Europe and others” in the G-8 and the G-20 may need to accept the realities of the new world, shift their voting powers to the “new countries” such as Asia, making international financial institutions more relevant to them.
For the IMF to be more effective, Camdessus said it should undergo these basic changes: a new mandate, a high council entrusted with key political responsibilities, and the real establishment of unquestionable legitimacy. Camdessus said amendments should be made to IMF’s articles of agreement: “A new mandate is indispensable…[The IMF] should have full surveillance of financial governance. No institution has before been formally in charge of this.”
The IMF, Camdessus added, should also be able to focus more on systemic issues, as well as promote efficiency and accountability. Aside from an improved IMF, Camdessus stressed the need for a new global governance group, where all countries are members and are represented in all levels: “The G8 should be prepared to relinquish some of its responsibilities.”
The Asian Development Bank (ADB) is eyeing a 200-percent increase in its capital resources in order to increase lending and financial assistance to its members who will be needing additional funds during the crisis. In a briefing with reporters, ADB president Haruhiko Kuroda said ADB shareholders are now discussing the increase in the Manila-based multilateral development bank’s capital resources.You can see copies of the speeches of Camdessus and Kuroda on the ADB website.
He said he is hopeful shareholders will already have a decision on the increase before the 42nd Annual Meeting of the ADB in Bali, Indonesia, from May 2 to 5 this year. “We are asking shareholders to increase our capital resources by 200 percent. [The shareholders are] discussing among themselves [the possible] general capital increase. Hopefully, before Bali, we will agree [whether] to increase [capital resources or not],” Kuroda said on Monday...
Kuroda said, in his speech during the South Asia Forum on the Impact of the Global Economic and Financial Crisis, that the bank is stepping up its operations by “several billion dollars” from the originally planned $12 billion in 2009 to better respond to the crisis.
The increase in capital resources, Kuroda said, will address the financing needs of its member-countries, particularly during this time of crisis. The increase in capital resources will also allow the bank to continue providing assistance to reduce poverty and promote development in member-countries.
Kuroda said the additional resources will be divided proportionately among its focus areas. Under the ADB’s Strategy 2020, or the long-term strategic framework adopted in 2008, the ADB will follow three complementary strategic agenda, namely, inclusive growth, environmentally sustainable growth and regional integration.
The ADB president said the role of multilateral development banks will be crucial in helping countries all over the world overcome the crisis. He said the critical areas where development banks will be needed at this time of crisis will be infrastructure, education and health. “We must work together to ensure that developing Asia has sufficient access to financing—through a mix of loans, grants and credit guarantees,” Kuroda said.
Earlier, in a paper titled “Global Financial Crisis and Proposed ADB Response” by the bank’s Strategy and Policy Department, the Manila-based multilateral financing institution said among the proposed responses of the ADB to respond to the crisis is to front-load its two-year Asian Development Fund (ADF) lending and grants to $3.4 billion in 2009 and add around $5 billion to $6 billion for Ordination Capital Resources (OCR).