Asia’s growing influence

Asia emerged from the global financial crisis with its standing strengthened, and is expected to become the largest economic region in the next two decades. This reflects its high degree of integration into global trading and financial systems, and a growing internal momentum.

Given its rise, it is natural that Asia’s voice should become increasingly influential in global economic and financial discourse. This trend is already well underway. Six of the Group of Twenty (G-20) major industrialized and emerging market economies are from the Asia-Pacific region. Following IMF quota and voice reforms—set to take effect by October 2012—Asia will hold well over 20 percent of the IMF’s voting shares. This will bring Asia’s representation at the IMF more closely into line with its position in the world economy.

Asia’s increasing influence is also being reflected in the composition of IMF staff, and at the very top of the organization. Two of the four Deputy Managing Directors of the organization are from Asia: Naoyuki Shinohara comes from Japan, and Min Zhu is from China.

Key aspects of the IMF’s engagement

The recent global financial crisis and reforms underway at the IMF suggest that the Fund has much to offer the region. Benefits include:

Economic monitoring and advice: The IMF’s surveillance work is being enhanced to strengthen its regional focus, including on Asia. This includes an annual report on the regional economic outlook for Asia. With its global perspective and enhanced focus on vulnerabilities and potential spillovers, IMF surveillance can deepen the analysis of individual countries and regions. In addition, by working in cooperation with Asia and other regional groupings, the IMF can help inform peer group assessments, such as the G‑20 Mutual Assessment Process. Asian countries also participate in the Fund’s Financial Sector Assessment Program, established in 1999, to provide a comprehensive analysis of a country's financial sector.

Technical assistance and training: The IMF has increasingly adopted a regional approach to the delivery of technical assistance and training. As well as providing technical assistance to individual countries, it operates seven regional technical assistance centers, including one in the Pacific—the Pacific Financial Technical Assistance Center—that delivers capacity-building technical assistance and training to 16 Pacific Island countries. The IMF also runs regional training programs in China, India, and Singapore, and has a major regional office in Tokyo.

Resources: As part of its efforts to support countries during the global financial crisis, the IMF expanded its lending capacity and is continuing to seek ways to further enhance its lending facilities. Also, building on the recent experience of lending in cooperation with partners in Europe, the IMF is exploring the scope for greater collaboration with other regional financing arrangements, including in Asia through the Chiang Mai Initiative.

Sharing of knowledge: Asia will need to build on its robust structural foundations and policy frameworks to address near and long-term challenges. Leveraging know-how acquired from many countries and regions, the Fund can assist in the process of transformation and smooth integration into the global economy. In return, the IMF benefits from its dialogue with Asian member countries, including on how best to work with regional institutions.

Lessons from the Asian crisis

The 1997–98 Asian Financial Crisis was severe and many people in the region endured considerable hardship. Large financing arrangements provided by the IMF and others at that time provided breathing room to allow the implementation of deep but necessary reforms. Since then, many of these same economies have performed remarkably well. Asia’s resilience during the more recent global financial crisis is testament to the enduring benefits of the often-difficult reforms undertaken during the past 15 years.

The IMF learned important lessons from the Asian crisis. In particular, the Fund recognized that while deep economic problems require harsh measures, the conditions accompanying its programs should focus squarely on the problems at hand. Moreover, the Fund has become more attuned to the social impact of its programs. The IMF has sought to apply these and other lessons to its more recent lending programs around the world.

The future for Asia and the IMF

Asia’s contribution to the Fund: The commitment of major Asian countries to the IMF was highlighted during the global financial crisis. Several Asian countries agreed to bolster the Fund’s lending capacity. Japan was the first, providing US$100 billion to the IMF in bilateral borrowing, followed by China and India. Korea and Singapore agreed to increase their contributions to the New Arrangements to Borrow (NAB), and the Central Banks of Malaysia, the Philippines, and Thailand also agreed to join the NAB. In the context of the 2009 Low-Income-Country Financing Package to boost the Fund’s concessional lending capacity, a number of Asian countries provided loan resources and subsidy resources to the Poverty Reduction and Growth Trust.

IMF’s presence in the region: The IMF is committed to fostering a closer dialogue and two-way engagement with Asia to develop a shared vision that will promote sustained economic growth in Asia and the world. As part of that commitment, the IMF’s Asia and Pacific Department established a regional advisory group comprising renowned economic experts from Asia. Another dimension of that engagement involves the greater presence of the IMF in the region, through local Resident Representative offices and co-hosting of conferences with regional partners.

Annual Meetings: In recognition of the economic importance of the Asia region and as a tribute to the 60th anniversary of Japan’s membership in the IMF and World Bank, the 2012 Annual Meetings of the IMF/World Bank Group will be held in Tokyo. Major themes of the Meetings will include how Asia’s growing economic role could reshape the global economy and how best to achieve sustained and inclusive growth that creates jobs and lifts people out of poverty.