To assist Asian countries in overcoming their economic difficulties and to contribute to the stability of international financial markets, Japan stands ready to provide a package of support measures totaling US$30 billion, of which US$15 billion will be made available for the medium- to long-term financial needs for economic recovery in Asian countries, and another US$15 billion will be set aside for their possible short-term capital needs during the process of implementing economic reform.

I. Medium- to Long-Term Financial Support to Asian Countries

Asian countries affected by the currency crisis need medium- to long-term capital to implement the various policy measures described below for economic recovery.

(1) Supporting corporate debt restructuring in the private sector and efforts to make financial systems sound and stable

(2) Strengthening the social safety net

(3) Stimulating the economy (implementation of public undertakings to increase employment)

(4) Addressing the credit crunch (facilitation of trade finance and assistance to small- and medium-sized enterprises)

To meet these medium- to long-term capital needs of Asian countries, Japan will extend financial assistance to those countries making use of the various measures listed below. In doing so, due consideration will be paid to the better use of the Tokyo market to mobilize Japanese funds.

(1) Providing direct official financial assistance

i) Extending Export-Import Bank of Japan (JEXIM) loans to Asian countries

ii) Acquisition of sovereign bonds issued by Asian countries by the JEXIM

iii) Extending ODA yen loan to Asian countries

(2) Supporting Asian countries in raising funds from international financial markets

i) Use of guarantee mechanisms

a) Utilizing the guarantee functions of the JEXIM

- The JEXIM will guarantee bank loans to Asian countries.

- The JEXIM will guarantee sovereign bonds issued by Asian countries (legal amendment is necessary).

b) Providing export insurance to bank loans to Asian countries

c) Requesting the World Bank and the Asian Development Bank to step up their efforts to provide guarantees to bank loans and bond issuance by Asian countries

d) It is hoped that in the long run the establishment of an international guarantee institution with a prime focus on Asian countries will be seriously considered.

ii) Interest subsidies

Japan will establish an Asian currency crisis support facility backed by our funding. This facility will be used to provide interest subsidies to Asian countries that borrow funds from JEXIM or private banks in conjunction with loans from the Asian Development Bank.

This will be an open facility in which all countries are welcome to take part.

(3) Financial support in the form of co-financing with multilateral development banks

Japan will continue to provide co-financing with the World Bank and the Asian Development Bank to Asian countries. In particular, we will call for maximum financial assistance from the World Bank and the Asian Development Bank to support those Asian countries that are faced with huge capital needs in an effort to address the issue of corporate debt restructuring and the restoration of stability in the financial system. We are ready to provide co-finance with these two banks.

(4) Technical assistance

The World Bank and the Asian Development Bank will be requested to provide necessary technical assistance through Japan special funds to Asian countries that are to implement a comprehensive approach to address the issue of corporate debt restructuring and the restoration of the financial system. Japan is prepared to contribute by means of providing technical assistance to these Asian countries, taking into account the respective situations in those countries.

II. Short-Term Financial Support to Asian Countries

Asian countries may face some needs for short-term capital in the course of making progress in their economic reform. To be prepared to meet these needs such as facilitation of trade finance, Japan will set aside US$15 billion in short-term funds which will take the form of swap arrangements.

Japan intends to cooperate closely with the multilateral development banks and the related countries, especially Asia-Pacific countries and G-7 countries, in implementing the new initiative.

          [International Finance]

[New Miyazawa Initiative]

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