Finance Minister AMA Muhith yesterday called upon the Asia Pacific countries to raise their voice together to claim their share from a G20 fund created to tackle the fallout of global recession.
He also demanded a proper distribution of the $1.1 trillion fund generated by G20 leaders in April this year to help developing countries and stimulate world trade. Of the fund, developing and poor countries will receive only $50 billion.
The World Bank and the International Monetary Fund are likely to manage the fund.
The minister also expressed dissatisfaction at the poor allocation of $50 billion for the underprivileged countries to deal with the financial crisis that originated in the developed countries.
“There is a group of vulnerable countries and what kind of system should be followed to distribute this fund is very important,” Muhith told the inaugural session of a four-day regional workshop on strengthening responses to the global financial crisis in the Asia-Pacific region at Sonargaon hotel in Dhaka.
United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and the Bangladesh Bank jointly organised the programme to work out realistic and viable policy suggestions required for the region to weather the ongoing global recession.
Finance ministry and central bank officials of 17 Asia Pacific countries, including China, India, Malaysia, Fiji and Russia, are taking part in the workshop.
Muhith also came down heavily on the global financial regulators — IMF and WB — for their ‘sheer failure’ to warn member countries about the recession.
“Early warning system has totally failed. We’ve to think about restructuring the system,” said the minister.
He also urged the participating countries to work together for restructuring the global financial system that he said had failed to give the countries warning before the financial crisis.
The finance minister also felt the necessity to change the global attitude to use resources for trade financing in the wake of the financial meltdown that has affected trade financing badly.
“Reserves could be used for trade financing such as purchase of fuel, fertiliser and food,” Muhith suggested.
Easy access to trade financing is crucial to absorb financial shock, he said.
The minister however said keeping up the domestic demand is vital to absorb the shock following a decline in demand.
“Creating domestic demand is most obvious to mitigate the impacts of the crisis,” he said.
More spending is needed for social and infrastructure development to keep the domestic demand up amid the crisis, he suggested.
Bangladesh Bank Governor Dr Atiur Rahman presented a keynote paper at the session chaired by BB Deputy Governor Nazrul Huda. Nagesh Kumar, director of Macroeconomic Policy and Development Division of ESCAP, delivered the address of welcome.
Rahman called upon the regional countries to strengthen cooperation in response to the current crisis.
“To grow intra-regional trade is required to reduce dependence on North American and European markets,” he said.
A strong regional bond market can also help channel regional savings into real sectors, he added.
The governor also echoed the finance minister for restructuring the global financial system.
Source: The Daily Star, 28 July 2009
Move away from export-led growth: Experts suggest as regional workshop ends
Asia-Pacific countries should focus more on growth driven by internal resources than on export-led growth, said finance and central bank officials at a high-profile regional workshop that ended yesterday.
The four-day workshop on “Strengthening the Response to the Global Financial Crisis in Asia-Pacific: The Role of Monetary, Fiscal and External Debt Policies” was co-organised by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and Bangladesh Bank (BB) in Dhaka.
The experts also recommended a separate regional currency for Asia-Pacific countries.
At a press briefing, Bangladesh Bank Governor Dr Atiur Raman said they do not want to exclude export-led growth but couple it with an emphasis on internal resources such as agriculture and small and medium enterprises.
“Depending on only external sources would not work anymore. We have to depend on our own resources,” Rahman said. “Issues over a separate currency are still at discussion levels. We have far to go before it can be implemented.”
Rahman stressed faster growth of regional exports and development of regional bond markets.
On the need for deeper regional cooperation in the Asia-Pacific, the delegates said in a written statement: “Given the need to contain global imbalances, the United States and the European Union are unlikely to continue to act as engines of driving Asia’s export-led economic growth.”
Asian countries need new engines of growth to revive their rapid growth rates, according to the statement.
“An increase in the share of domestic demand in aggregate demand can make up for the expected loss of dynamism in traditional export markets,” it said.
The experts recommended a regional unit of account for intra-regional trade could be created as a way to facilitate the expansion of trade and reduce disruptions to foreign exchange rates.
“Moreover, part of the region’s huge foreign exchange reserves could be allocated to a regional sovereign wealth fund to promote investment activity across the region,” the statement said.
“It could play a role in supplementing national efforts to generate aggregate demand and support poorer countries and countries with less fiscal space, in a sort of regional Keynesianism,” the statement added.
The exports also said the outcome of this workshop will be presented to ESCAP’s member countries at the meeting of the “Committee on Macroeconomic Policy, Poverty and Inclusive Development’ to be held in Bangkok on November 23-26, which will report to the 2010 annual session of the commission.
Dr Aynul Hasan of ESCAP spoke at the press conference while BB Economic Adviser Dr Habibullah Bahar presented the recommendations.
High-level government officials from the finance ministry and the central banks of 17 countries, economists and experts from United Nations Development Programme, Asian Development Bank, International Monetary Fund, World Bank and NGOs attended the workshop.
Finance Minister AMA Muhith inaugurated the workshop on July 27.
Source: The Daily Star, 31 July 2009