China and the Philippines have signed a currency swap agreement and a
memorandum regarding china's provision of a preferential loan for a Philippine
railway project, in a latest move to boost bilateral cooperation and safeguard
regional financial stability.
Philippine President Gloria Macapagal-Arroyo and visiting Chinese top
legislator Wu Bangguo witnessed the ceremonial exchange of the signed swap deal
and the signing of the memorandum of understanding at the Presidential Palace in
Manila Saturday.
Under the bilateral currency swap deal between the central banks of the two
countries, China will provide as much as 1 billion US dollars credit to the
Philippines when necessary to supplement rescue funds by international financial
institutions, in order to help the Philippines solve balance of payments
problems and protect its financial stability.
The agreement is the fifth of its kind signed by China, which has already
signed bilateral currency swap deals with Thailand, Japan, South Korea and
Malaysia totaling 8.5 billion dollars.
Such agreements are part of the Chiang Mai Initiative which aims to build
closer monetary ties by creating a network of central bank currency swaps among
the 10 members of the Association of Southeast Asian Nations plus China, Japan
and South Korea (ASEAN plus three).
The pacts make foreign exchange reserves available at short notice to a
country facing short-term international payment problems and whose currency is
under speculative attack, in a bid to avert a financial meltdown similar to the
1997-1998 Asian financial crisis triggered by the sharp devaluation of the Thai
baht.
The Chiang Mai Initiative was adopted by ASEAN plus three finance ministers
at their second annual meeting in Thailand in May 2000. With the signing of the
deal between China and the Philippines, the number of bilateral currency
agreements in the region has increased to 13, and the size of the network has
reached 32.5 billion dollars.
ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the
Philippines, Singapore, Thailand and Vietnam.
Under the memorandum of understanding signed by the Export- Import Bank of
China and the Philippine Department of Finance, China will provide a
preferential buyer's credit of 400 million dollars for the financing of the
construction of a railway in the main northern island of Luzon in the
Philippines.
Wu Bangguo, Chairman of the Standing Committee of the National People's
Congress of China, arrived in Philippine Saturday afternoon for an official
visit and for the Fourth General Assembly of the Association of Asian
Parliaments for Peace.
