Fourth Meeting of the Manila Framework Group (March 26-27, 1999 Melbourne, Australia)

Chairman's Summary

Finance and Central Bank Deputies from the fourteen Manila Framework economies met inMelbourne on March 26 and 27¹⁾. Senior representatives from theIMF, World Bank and the Asian Development Bank also participated.

Deputies agreed on the importance of countries continuing to push aheadwith domestic financial and economic reforms and of progress on improvements to theinternational financial system.

The Group considered lessons from the Asian crisis, keying off theIMF’s recently published paper “IMF-Supported Programs in Indonesia, Korea andThailand: a Preliminary Assessment”. These discussions benefited from the first-handexperience of the participants and were directed to improving future programs. Thediscussion highlighted ways in which program ownership and credibility could bestrengthened, ways in which programs might be better developed and implemented by thegovernment concerned, the requirements of more effective communication with marketparticipants, and the impact of programs on the poor and the most vulnerable. The Groupalso discussed the appropriate stance of monetary policy in crisis situations.

The Group reviewed progress in other discussions directed at improving theinternational financial system. Particular emphasis was placed on the operations of highlyleveraged institutions and the role of private sector lenders in crisis situations. TheGroup stressed the importance of greater and more symmetrical application of transparencyrequirements in both the public and private sectors in helping to prevent future crises.In that context, it welcomed Australia’s preparation of a Transparency Report, whichdetails Australia’s compliance with a range of transparency codes and standards.

In their regional suveillance discussions, the Group noted that progresstoward economic recovery in the crisis-affected economies of Asia had been helped bystabilisation in financial markets and by supportive fiscal policies, and that activityhas begun to strengthen in some economies and stabilise in others. Deputies emphasised theimportance of a more sustained recovery in economic activity, of continuing efforts onstructural reform, particularly in financial sectors and with corporate restructuring, andstrong implementation of social policies with support of the international community.

Japan reiterated its commitment to maintaining stimulus to domesticdemand, and reported progress in financial sector reforms. China reported that fiscalstimulus would sustain growth at strong level in 1999. The robust growth in the UnitedStates is likely to continue to provide momentum for the global economy, but US growth isexpected to slow and, in any case, is not a sustainable substitute for the resumption ofdomestically generated growth elsewhere. Looking beyond the Group economies, Deputies alsonoted the desirability of solid growth in Europe supported by appropriate policy settings.

Deputies thanked the Australian Government for its hospitality andarrangements. The next meeting is scheduled to be held in Singapore in September 1999.