§ Lord Kennetasked Her Majesty's Government:
How much of the emergency loans organised by the International Monetary Fund have been used to repay Japanese, European and United States banks that made loans in the Far East which have not been repaid; and what is the reason for protecting these lenders from market forces. [HL2401]
§ Lord McIntosh of HaringeyLarge scale financial assistance has been provided by the official international community in support of programmes of economic adjustment in the Asian countries concerned, and will be vital for the restoration of confidence and financial stability in the economies of Asia. It is not possible to say exactly how much of this financing has been used to meet private sector debts. But a purpose of this approach has been to help countries regain access to the international capital markets, which Thailand and Korea have recently done. Both these countries have succeeded in substantially rebuilding their foreign exchange reserves.
It is important however that private sector creditors bear their share of the cost of adjustment in Asia, and participate in global efforts to resolve the current difficulties. This point was made strongly in the recent G7 Finance Ministers' report on Strengthening the architecture of the global financial system. The private sector debt restructuring agreements reached by Korea and Indonesia this year represent a significant achievement in this respect.