Asian, European leaders agree to extend ASEM trust fund

Asian Economic News, Oct 23, 2000

SEOUL, Oct. 20 Kyodo

Asian and European leaders agreed at the third Asia-Europe Meeting (ASEM) Friday to extend their two-year-old trust fund created to alleviate the impact of the financial crisis on Asian countries, a senior South Korean official said.

The ASEM leaders agreed in principle on the extension for the ASEM trust fund (ATF) and that details will be discussed at the ASEM finance ministers' meeting in Kobe, western Japan, in January next year, said Chung Ui Yong, deputy minister for trade at South Korea's Foreign Affairs and Trade Ministry.

To demonstrate Europe's commitment to Asia and its economic recovery, British Prime Minister Tony Blair proposed the $43.3 million fund at the second ASEM summit in London in April 1998.

The European Union (EU) contributed $15 million to the fund, while eight EU member states contributed a total of $27.8 million and China $500,000. In addition, South Korea made an in-kind contribution worth $120,000 for the cost of specific activities conducted in the country.

Administered by the World Bank, the fund was agreed to be operational for two years, but disbursements could be made until the end of 2001.

Asian countries, with the exception of Japan, Singapore and Brunei, are eligible to borrow from the fund.

As of the end of last year, the World Bank had approved proposals from Indonesia, Malaysia, the Philippines, Thailand, Vietnam, China and South Korea amounting to $40.12 million.

Of that, 50.2% has been for the social sector and 49.8% for financial sector reform.

Southeast Asian countries have accounted for 65% of disbursements, northeast Asia for 25%, and regional programs for 10%, according to the World Bank.