§ Mr. Heathcoat-AmoryTo ask the Chancellor of the Exchequer what terms he has attached to money lent or committed to South Korea as part of the IMF rescue package or otherwise. [19914]
643W
§ Mrs. LiddellIMF financing under Korea's Stand-By Arrangement (SBA) is conditioned on a strong programme of adjustment. This involves a tight macroeconomic framework; a comprehensive strategy to restructure the financial sector; further trade and capital account liberalisation; and improvements in corporate structure and governance. The Presidents of the World Bank and Asian Development Bank have also indicated that they are both ready to provide financial support to Korea, conditioned on strong programmes of reform. It is expected that these programmes will focus on financial sector restructuring and institutional reform.
Full implementation of these programmes will help restore market confidence and provide Korea with a solid foundation for more sustained growth. Programmes will be reviewed regularly and future disbursements of funds will be linked to successful completion of the reviews.
In addition, the UK—together with a number of other countries—has agreed to consider the provision of further financial support for Korea. This will be made available only if unanticipated circumstances create the need to supplement resources provided by the international financial institutions, while Korea remains in compliance with IMF arrangements.
§ Mr. Heathcoat-AmoryTo ask the Chancellor of the Exchequer what has been the recent United Kingdom contribution to the rescue packages from(a) the IMF, (b) other institutions and (c) directly to (i) South Korea and (ii) other Asian countries. [19912]
§ Mrs. LiddellFour Asian countries have recently agreed IMF programmes under the IMF's Emergency Financing Mechanism. They are the Philippines (July), Thailand (August), Indonesia (October) and Korea (November). The latter three countries have in addition agreed, or are negotiating, programmes with the World Bank and Asian Development Bank (AsDB). The financing to be provided by international financial institutions (IFIs) is likely to amount to the following:
$ billion International Financial Institution Finance
Total IFI Financing
IMF World Bank AsDB Philippines 1 — — 1 Thailand 4 1.5 1.2 6.7 Indonesia 10 4.5 3.5 18 South Korea
21 10 4 35 The UK is a major shareholder in the international financial institutions—the UK quota share at both the IMF and World Bank is approximately five per cent., and at the AsDB is two per cent.—and has strongly supported all these programmes of adjustment and the high levels of IFI financing involved. Programmes will be reviewed regularly and future disbursements of funds will be linked to successful completion of the reviews.
In the case of Korea, the UK, together with a number of other countries has in addition agreed to consider the provision of further financial support for Korea. This will be made available only if unanticipated circumstances create the need to supplement resources provided by the 644W international financial institutions, while Korea remains in compliance with IMF arrangements. The UK is willing to consider a contribution of up to USD1.25 billion.
In the case of Thailand, the Bank for International Settlements (BIS) issued a statement on behalf of the monetary authorities of the G10—including the Bank of England—and several other countries, explaining that they stand ready, if need be, to provide a short-term bridging loan to the Thai authorities. So far the need for such a loan has not arisen.