When the CMIM was declared in December of last year a political decision was made regarding each countries' contribution and multiplier. Essentially a three tier system was set up for the multiplier (the multiplier determines how many times more than the contribution a given country can access). The multiplier also determines were one stands as a giver or taker of resources and is negetively correlated to contribution - it is therefore a marker of a rule giver or taker for the CMIM as a whole.
Those with a multiplier of 1 could not extract more from the CMIM that they put in. China, Japan and Korea as the suppliers of the international public good are on this top tier. On the other extreme are the undeveloped ASEAN members (the CLMV plus Brunei) which have a multiplier of 5.
Then there are the developed ASEAN-5 members (Indonesia, Malaysia, Singapore, Thailand and the Philippines) with multipliers of 2.5. Until May, the ASEAN-5 countries contributed 4.77 billion, except the Philippines (3.6). However, at the ASEAN Finance Minister's meeting in Tashkent saw this be revised (paywalled). The ASEAN-5 (with 2.5 multipler) now have a uniformed contribution of 4.5 billion, with the Phillipines commiting more and the other pairing back their commitments.
This represents a victory of sorts for ASEAN cooperation. As "the four other ASEAN founding states had agreed to an interim arrangement to temporarily cover part of the Philippines’ obligation to the fund, pending sufficient levels of gross international reserves (GIR) to cover this regional commitment, a BSP officer explained yesterday." On the other hand, the fact that the other ASEAN countries had to reduce their commitments demonstrates that the NEA:SEA 80:20 split rule is still in force. Certainly neither China or Japan would want to reduce their commitments - while ASEAN is still more interested in what they can get out of the CMIM than what they can put in.
Before the Phillipines could agreement to expanding its commitment, it was important the its reserves be in a healthier position. Thus it was only after "The country’s GIR rose to $47 billion as of end-April, enough to cover 9.3 months of imports of goods and services. It is also equivalent to 11.8 times the country’s short-term external debt based on original maturity" that the commitment could be made. But it is worth noting that the Philippines can only source 11.38 billion from the CMIM, enough to help in the event of short-term liquidity shocks or balance-of-payments difficulties but far from what would be needed to decouple from the IMF
Just a thought but as the CMIM pact does not require an upfront transfer until after a swap request has been approved, I can not see why the Phillipines was not in position to start at 4.55 from the outset.
h/t the emerging scholars who encouraged me to restart this project
Those with a multiplier of 1 could not extract more from the CMIM that they put in. China, Japan and Korea as the suppliers of the international public good are on this top tier. On the other extreme are the undeveloped ASEAN members (the CLMV plus Brunei) which have a multiplier of 5.
Then there are the developed ASEAN-5 members (Indonesia, Malaysia, Singapore, Thailand and the Philippines) with multipliers of 2.5. Until May, the ASEAN-5 countries contributed 4.77 billion, except the Philippines (3.6). However, at the ASEAN Finance Minister's meeting in Tashkent saw this be revised (paywalled). The ASEAN-5 (with 2.5 multipler) now have a uniformed contribution of 4.5 billion, with the Phillipines commiting more and the other pairing back their commitments.
This represents a victory of sorts for ASEAN cooperation. As "the four other ASEAN founding states had agreed to an interim arrangement to temporarily cover part of the Philippines’ obligation to the fund, pending sufficient levels of gross international reserves (GIR) to cover this regional commitment, a BSP officer explained yesterday." On the other hand, the fact that the other ASEAN countries had to reduce their commitments demonstrates that the NEA:SEA 80:20 split rule is still in force. Certainly neither China or Japan would want to reduce their commitments - while ASEAN is still more interested in what they can get out of the CMIM than what they can put in.
Before the Phillipines could agreement to expanding its commitment, it was important the its reserves be in a healthier position. Thus it was only after "The country’s GIR rose to $47 billion as of end-April, enough to cover 9.3 months of imports of goods and services. It is also equivalent to 11.8 times the country’s short-term external debt based on original maturity" that the commitment could be made. But it is worth noting that the Philippines can only source 11.38 billion from the CMIM, enough to help in the event of short-term liquidity shocks or balance-of-payments difficulties but far from what would be needed to decouple from the IMF
Just a thought but as the CMIM pact does not require an upfront transfer until after a swap request has been approved, I can not see why the Phillipines was not in position to start at 4.55 from the outset.
h/t the emerging scholars who encouraged me to restart this project
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Hi Joel,
ReplyDeleteThere has been a general consensus of expanding of the CMIM towards ASEAN+6. In your opinion, what do you think is the cost and benefits of CMIM membership expansion?
Hello.
ReplyDeleteWell India and Australia (unsure of NewZealand) have expressed some interest in joining. From Aus and India's point of view the costs are to do with whether or not it undermines the (IMF), which it doesn't and whether they would be forced to loan into a crisis against their will (which seems unlikely). ASEAN is I would imagine, but have not confirmed with anyone, happy to have more money at the table. Japan would be well pleased too, Korea probably on board. China would object, and so too could some smaller countries in ASEAN. Veto is also de facto for China, but a ASEAN voice in opposition could trigger concensus rule. a new member/s would consensus approval to join. This is a hard sell, and the returns might be low for those wishing it anyhow. Like all institutions, the more the merrier - providing the rules are not watered down.