Abhisit to propose liberal loans

Prime Minister Abhisit Vejjajiva will be proposing to the G-20 Summit that both the World Bank (WB) and the International Monetary Fund (IMF) provide financing help to crisis-hit developing countries without any conditions attached.

This represents one of the key messages that Abhisit, as the current chairman of Asean, will take to London early next month, when leaders of the Group of 20 meet to discuss concerted measures to tackle the global financial crisis.

Abhisit has been invited by UK Prime Minister Gordon Brown to take part in the G-20 Summit and provide a collective input from Asean.

In an exclusive interview with The Nation at Government House yesterday, Abhisit said the World Bank and the IMF should come to the aid of emerging-market economies without conditions, should they need assistance.

Abhisit shares with Nation editor Thanong Khanthong opinions on the global economic situation and the upcoming G20 meeting.

[Click here the watch Abhisit's full interview in Thai Part 1

Click here the watch Abhisit's full interview in Thai Part 2]

While the epicentre of the global financial crisis is the United States, the financial and economic impact is being felt worldwide, he said.

The IMF has been known to attach tough conditions to countries receiving its bail-outs in return for disbursement of funding from its standby credit. At the same time, the World Bank should open its loan window to crisis-hit countries, Abhisit said, so that they can use the money to finance infrastructure projects or alleviate poverty.

But the IMF's funding is limited, and US Treasury Secretary Timothy Geithner is now pushing for an increase in its emergency funding to US$500 billion (Bt17.9 trillion).

Another major issue at the G-20 Summit is a concerted drive to increase government stimulus programmes to lift the world out of recession. The United States and the United Kingdom have been calling for more aggressive government spending, while other European governments, particularly the French and the Germans, feel that the financial-system crisis should be addressed first. They still differ, given the constraints of each country, on the scale of government intervention in their economies.

Abhisit said he would propose to the G-20 Summit, whose members account for about 80 per cent of the world's economy, that each country set a specific target of fiscal spending to which it would commit. "Without the target, it would not bring about any clear-cut result. Otherwise, we can just talk without anything happening," he said.

Abhisit will also send a message to the G-20 Summit that the Doha Round of multilateral trade talks must be brought to a successful end. The Doha Round will not only promote global trade but will deter countries from resorting to trade protectionism during this time of financial and economic crisis, he said.

Abhisit's last main point to be proposed to the summit is how Asia could use its vast foreign-reserve holdings to stimulate growth and investment in the region, which would in turn help global growth.

However, he is currently unsure about the arrangement for using such a surplus.

"It might be necessary to have an agency to guarantee this reserves scheme. I am not sure yet how it can be implemented," he said.

Until the end of this month, Abhisit will be circulating

for other Asean leaders' approval the message that he plans to carry to the G-20 Summit.

Once he gets their feedback, he will formulate the message as Asean's collective position as a proposal for tackling the global financial crisis.