Asia and the IMF

As Asia grows in importance, relations between the region and the IMF are also being revitalized. The Fund and the countries of the region have both drawn lessons from the Asian Financial Crisis and are forging a partnership which will build on the regions economic success and resilience.

Asias growing influence

Asia has emerged from the recession with its standing in the world strengthened. Highly integrated with the global trading and financial systems, Asia is set to become the largest economic region in the world over the next two decades.. The speed of that growth, and Asias economic openness, underline its increasing importance for the global economy. Given its rise, it is natural that Asias voice should become increasingly influential in global economic and financial discourse. This trend is already under way. Six of the Group of Twenty (G-20) major industrialized and emerging market economies are from the AsiaPacific region. Following IMF quota and voice reforms in December 2010 which are set to take effect by October 2012, Asia will hold well over 20 percent of the IMFs voting shares. This reflects the substantial increase in IMF quota shares held by dynamic emerging markets and developing economies. These reforms will benefit Asia, bringing the regions representation at the IMF more closely in line with its position in the world economy. Asias increasing influence is also being reflected in the composition of IMF staff, and at the very top of the organization. Two of the four Deputy Managing Directors of the organization are from Asia. Naoyuki Shinohara, comes from Japan; and Min Zhu is from China.

Key aspects of the IMFs engagement

The IMF is investing in its long-term partnership with Asia. The recent global crisis and reforms underway at the IMF illustrate that the Fund has much to offer the region. Benefits include: Economic monitoring and advice: The IMFs surveillance work is being enhanced to include a stronger regional focusof particular value to Asia. Every six months the IMF publishes its regional economic outlook for Asia. By focusing more on vulnerabilities and possible spillovers, IMF surveillance can provide a global perspective and help deepen individual country or regional analysis. Spillover Reports were prepared to explore the external effects of policies in five systemic economies, two of which were China and Japan. By working in cooperation with Asia and other country groups, the IMF can help form a more effective network of peer assessments, such as the G-20 Mutual Assessment Process. Asia is also playing an important role in the Funds Financial Sector Assessment Programa voluntary, comprehensive and in-depth analysis of a country's financial sector, established in 1999. To date, more than three-quarters of the IMFs member countries have undergone assessments, including major Asian economies. Technical assistance and training: The IMF has increasingly adopted a regional approach to the delivery of technical assistance and training. As well as providing

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Factsheet URL: http://www.imf.org/external/np/exr/facts/asia.htm

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technical assistance to individual countries, it operates seven regional technical assistance centers, including one in the Pacificthe Pacific Financial Technical Assistance Centerwhich delivers capacity-building technical assistance and training to 15 Pacific island countries. The IMF also runs regional training programs in China, India, and Singapore, and also has a major regional office in Tokyo. Resources: As part of its efforts to support countries during the global economic crisis, the IMF beefed up its lending capacity and is continuing to look at ways to improve its lending. Also, building on recent experience of lending in cooperation with partners in Europe, the IMF is exploring the scope for greater collaboration with regional financial arrangements, including in Asia. The IMF stands ready to support the efforts to enhance the effectiveness of and multilaterization efforts behind the Chiang Mai Initiative. Sharing of knowledge: Asia will need to build on its robust policy foundation to address the challenges it still faces in both the near and the long term. The IMF can help in that process. Leveraging its know-how acquired across many countries and regions, the Fund can assist in that process of change and more generally in the smooth integration into the global economy. In return, the IMF can benefit from a dialogue with Asian member countries, including how best to work with regional institutions.

Lessons from the Asian crisis

The crisis that several Asian economies faced in 199798 was severe and many people in the region endured considerable distress. The large amounts of financing provided by the IMF and others during the crisis provided the breathing room needed for many of their governments to undertake deep and painful reforms. Many of these same economies have performed remarkably well since then. Asias resilience following the more recent global crisis is testament to the enduring, and often difficult, reforms undertaken over the past decade. The IMF learned important lessons from the Asian crisis. In particular, the Fund recognizes that while tough measures are needed to address deep economic problems, the conditions accompanying its programs need to be more focused on the problems at hand, and it needs to be more conscious of the social impact of those programs. The IMF has sought to apply this and other lessons to its more recent lending programs.

The future for Asia and the IMF

The commitment of major Asian countries to the IMF was highlighted during the global financial crisis. Several Asian countries agreed to bolster the Funds lending capacity. Japan was the first, providing $100 billion to the IMF. It was quickly joined by Korea, China, India and Singapore. In addition, India also helped boost the Funds concessional lending capacity in 2009 when its central bank purchased 200 metric tons of IMF gold. The IMF is committed to creating a closer dialogue and two-way engagement with Asia. As part of that commitment, the IMFs Asia and Pacific Department established a regional advisory group made up of renowned economic experts from Asia. This group provides the Fund with advice on its policies impacting the region. Another part of that engagement

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involves increasing the IMFs presence in the region, including through Resident Representative offices, and the hosting of several regional conferences with regional partners (e.g. through the Developing Asia conference in Hanoi March 2010, the Asia 21 conference in the Korean city of Daejeon in July 2010, and the joint Bank Indonesia-IMF conference on Coping with Asias Large Capital Inflows held in Bali during March 2011). A major aim of this engagement is to build--through dialogue and a shared vision--sustained economic growth in Asia and the world.

THIS INFORMATION IS CURRENT AS OF SEPTEMBER 2011