The
Joint Ministerial Statement of
the Special ASEAN Finance Ministers Meeting
25 September 2000, Prague, Czech
Republic
1.
We, the ASEAN Finance Ministers, met in Prague to discuss progress made
in our efforts towards sustaining economic recovery in the region.
2.
H.E. Pehin Dato Abdul Aziz Umar, Minister Representing the Ministry of
Finance, Brunei Darussalam, presided over the meeting.
Recent
Economic Developments
3.
We reviewed our economic performances through the first half of this year
and are pleased to note that they have continued to gather momentum from the
recovery last year. For the full
year 2000, we expect average growth rate for the region to rise to 4.9% compared
to 3.3% in 1999.
4.
For the crisis-affected ASEAN countries, in particular, the stronger
growth has been achieved through a continued expansion in exports, a revival in
consumer spending and a turnaround in investment. Government expenditures have shown signs of tapering off as
private-led demand has played a greater role in supporting the economic
recovery.
5.
Monetary policies in most ASEAN countries remain geared towards achieving
domestic price stability and supporting growth.
Despite more volatile exchange rates in the second quarter of the year,
we have been able to contain inflation at 1.3% in the first half of year 2000
from the 10.4% experienced last year. Domestic
interest rates have therefore been further reduced or maintained on order to
stimulate economic activity and foster investment.
However, we are concerned over the potential effects of rising oil prices
on price stability in oil-importing countries.
Sustaining
ASEAN Economic Recovery
6.
Our efforts to revitalize domestic demand through retraining programs for
the unemployed, the enhancement of social safety nets and the acceleration of
bank and corporate restructuring have led to a significant improvement in
private consumption, which more than doubled to a 4.8% growth compared to the
1.9% expansion last year. We have continued to make steady if not spectacular
progress in debt restructuring this year as well as persist with prudential and
other structural reforms in the financial sector.
7.
In the light of the revival in consumer demand and the sharp increase in
domestic debt in the last two years, we agreed to work towards a more balanced
fiscal position over the medium term. We
are confident that with the improving trend in private consumption and
investment, our fiscal position will move into balance or surplus.
8.
Our strong performances in exports have contributed to a continued
surplus in the current account and the overall balance.
We have continued to build up our reserves and at the same time reduced
the region’s reliance on short-term debt, resulting in a continued improvement
in the ratio of official reserves to short-term external debt.
9.
We have also stepped up our efforts to develop bond markets in ASEAN
countries through consultations among officials, regulators, and market
practitioners. A Working Committee
on Capital Market Development has been set up and is working closely with the
private sector in developing a framework and the necessary infrastructure for
further development of the local bond markets as well as enabling the
cross-border issuance of debt within the region.
10.
To assist countries in meeting temporary liquidity problems, ASEAN agreed
to expand the size of the ASEAN Swap Agreement to make it larger as well as
include all ASAN countries. The
ASEAN Central Banks have agreed on the principles governing the expanded
facility and aim to conclude the agreement before the ASEAN Summit.
A network of bilateral swap arrangement among ASEAN countries, China,
Japan and the Republic of Korea is also being negotiated to provide temporary
financing for members which may be in balance-of-payments difficulty.
11.
We have also agreed with our East Asian counterparts to exchange
information on capital flows, in addition to exchanging views on economic and
financial developments in our economies. This would complement and enhance our
monitoring and surveillance activities.
12.
Notwithstanding the strong economic recovery, we noted that the average
growth is still below pre-crisis levels. In
our view, the region is capable of sustaining higher rates of growth provided we
address the structural weaknesses in our banking and corporate sectors.
This would help to revive investor confidence and attracts a higher level
of capital inflow, particularly foreign direct investment.
We therefore reiterate our commitment to make further progress in
structural reforms in order to achieve a higher sustainable growth rate.