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Published Date: 30 August 1999

Fifth Meeting of Finance and Central Bank Deputies on the Manila Framework,

29-30 August 1999 Summary of Manila Framework Meeting

30 Aug 1999...Finance and Central Bank Deputies representing the Manila Framework Group economies 1 met in Singapore on 29-30 Aug 99 for their Fifth Meeting. Senior representatives from the IMF, the World Bank, the ADB and BIS also attended the meeting.

The Group noted the improved global economic outlook. In the United States, growth appears to be moderating towards its potential. In Japan, there are clearer signs of recovery in some sectors. To secure the recovery, it was agreed that there is scope for continued fiscal stimulus until private sector demand strengthens further. Similarly, in China, pro-active fiscal policy through investment in fixed assets and capital upgrading, together with continued restructuring of the banking sector and state-owned enterprises would support growth.

The Group noted the marked improvement in the growth performance of the regional economies. However, they recognised that for a sustained, broad-based recovery, there is a need for determined follow-through on structural reforms. While banking restructuring is advancing, these gains should be reinforced by further progress in corporate restructuring.

The Group discussed efforts to reform the international financial architecture, including the ongoing work of the Financial Stability Forum. It was recognised that co-ordination of international bodies with different expertise was necessary to monitor the implementation of the wide range of international standards. The Group also exchanged views on the issues of highly leveraged institutions, capital flows, and choice of exchange rate regimes with a view to improving the stability of financial markets. There was broad support for better disclosure from highly leveraged institutions and better risk management by the creditors and counterparties of such institutions.

The Group agreed that capital account liberalisation needs to be carefully sequenced within a framework of sound financial supervision and prudential regulation. It should also be supported by adequate reporting requirements for capital flows. There was also consensus that the choice of an appropriate exchange rate regime would depend on each economy's circumstances and institutional features.

There was broad agreement that it is important to achieve more substantial progress to involve the private sector in the prevention and resolution of financial crises. The Group noted the progress that had been made in crisis-affected economies in the areas of insolvency regimes and bankruptcy laws, and in facilitating dialogue between creditors and debtors in effective debt workouts.

Hong Kong SAR agreed to host the next meeting of this forum in the first half of 2000.

Deputies unanimously thanked the Singapore Government for its warm hospitality and excellent arrangements.

1 Australia, Brunei Darussalam, Canada, China, Hong Kong SAR, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, United States of America

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