FROM SCRATCH NEWSWIRE

SCAVENGING THE INTERNET

JAPANESE GOV’T READIES MONEY FOR NEW IMF BAILOUT FACILITY

Posted by Gilmour Poincaree on November 2, 2008

Sunday, November 2, 2008

TOKYO (AP) – Japan is ready to provide some of its ample cash for any International Monetary Fund bailouts for struggling nations to help stabilize the growing global financial crisis, the finance minister said.

Japan will make that offer along with proposals about accounting standards and other regulatory adjustments needed to fix the growing economic woes at a world summit in Washington Nov. 15, Finance Minister Shoichi Nakagawa told reporters.

Nakagawa did not say the acceptance of its proposals would be needed to get any of the money but he said Japan expects to play a greater international leadership role on the international stage.

He said the IMF has about $ 210-billion funds but that may not be enough.

“Japan is ready if that prove insufficient,” he said, adding that Japan has $ 1 trillion in possible funding from its foreign currency reserves. “We see lending to the IMF basically as risk-free.”

He did not give specifics of what Japan’s proposals may be, stressing that Prime Minister Taro Aso was still hammering out details.

Britain and Germany support the creation of an International Monetary Fund facility to help smaller economies withstand the global financial crisis, Prime Minister Gordon Brown said on Thursday.

“We discussed how we must prevent contagion over the next few days to middle-income countries including in eastern Europe,” Brown told reporters after talks with German Chancellor Angela Merkel.

“It’s vital that the International Monetary Fund plays a central role in supporting these economies. We both agreed to support a new facility for the IMF which would draw on additional resources of countries with substantial reserves.”

IMF chief Dominique Strauss-Kahn told French daily Le Monde he would propose a new regulatory strategy at a meeting next month of the Group of 20 nations.

He said he would suggest a new type of loan to relieve short-term liquidity problems in some economies, and an increase in IMF resources which he said were insufficient to meet requirements over the medium

Nakagawa reiterated his earlier remarks and the views of other Japanese politicians that Japan wishes to exercise political leadership in offering its money and experience in wresting itself out of its bad debt woes of the 1990s.

He said Europe and the U.S. have historical experience with the Great Depression, but Japan has more recent experience and is in a better position to share its expertise.

“We were able to get ourselves out of our problems without help from any other nation,” he said at the Japan Press Center.

Earlier this week British Prime Minister Gordon Brown and German Chancellor Angela Merkel said the International Monetary Fund needs more money to bail out struggling countries.

Brown has called on countries such as China and the oil-rich Persian Gulf states to fund the bulk of an increase in the International Monetary Fund’s bailout pot. The IMF is giving Hungary, Iceland and Ukraine loans and is in discussions with Belarus.

The International Monetary Fund said Wednesday it is creating a new program to get money quickly to developing countries with strong economies that are facing cash crunches in the global financial crisis.

Nakagawa said countries need to respond quickly and work together to get out of the financial problems that started with the U.S. subprime mortgage crisis and is now spreading around the world.

“Japan is taking leadership,” he said.

He said Japan was also doing its part domestically with stimulus spending packages and regulatory changes to prevent a further plunge on the Tokyo stock market.

Merkel said joint action was needed to tackle the crisis.

“I believe the cooperation of the recent weeks has shown we are on the right path,” she said. “We must make risks (in financial markets) manageable.”

Brown said this week that the IMF needed more money to deal with the fallout from the global financial crisis and called on China and the Gulf states to play their part.

Asked about Brown’s call, China’s Foreign Ministry spokeswoman responded vaguely on Thursday but kept the door open to a bigger Chinese role in international rescue efforts.

Brown’s spokesman said he welcomed the positive responses from Germany and China to the proposal “and the indication that they (China) have given that they would be prepared to consider contributing to any such fund”.

Brown has said the issue of giving the IMF more resources will be on the agenda when he visits the Gulf this weekend.

Brown said he and Merkel were “in total agreement” about what needed to be done at a Nov. 15 global summit in Washington to discuss how to reform the global financial system.

“We need to have a transparency that has not existed in every area of the banking system,” he said.

Brown voiced confidence that the leaders would agree in Washington on the need for reforms to global supervision and cross-border cooperation as well as on the need to reopen talks on a new global trade agreement.

Merkel made no mention of a German economic stimulus programme widely trailed in national media, which a senior legislator in her ruling coalition said would be worth 20-25 billion euros ($ 26 billion-$ 32 billion).

Brown defended the decision he made back in 1997 to make the Bank of England independent.

“It’s absolutely the right idea. It’s stability and an anchor for our financial and economic system,” he said.

“The Bank of England has brought down interest rates twice recently. They continue to look at what they can do for the future, but I think we’ve got to understand that the way to deal with this global problem … is by a comprehensive set of measures,” he said, referring to interest rate cuts, tax cuts and British efforts to help homeowners and small businesses.

“I think you’ll see us, in the next few days, in a position to do more to help people face what is a global problem,” he said.

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘MANILA BULLETIN ON LINE’ (Philippines)

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