## Column I -6 Japan's Responses to the Asian Currency Crisis

A series of currency/economic crises in Asia started with the sudden decline of the Thai baht in July 1997, and then transmitted to country after country in the region, including Indonesia and the Republic of Korea (ROK), causing an unprecedented economic crisis involving the entire regional economy. The real economy of these countries, which had been praised as the "East Asian miracle" and had achieved continued high growth, drastically deteriorated. In 1998, all the countries experienced major negative growth (Thailand: -10.5%; Indonesia: -13.1%; Republic of Korea (ROK): -6.7%).

The series of crises had a serious impact on the social and economic aspects of those countries, but beyond that, its serious influence on the entire global economy, including Japan, was causing concern. To start with, Japan hosted a meeting of supporting countries for Thailand in Tokyo (August 1997) and then played a leading role in bilateral assistance in the initial response to the crises in cooperation with international organizations and other G7 countries. In addition, it provided not only support for liquidity to compensate temporary lack of funds but also long-term stable funds by using all of its policy financing vehicles, including Yen loans. Thereby, Japan did its utmost to bring about the recovery and stabilization of the real economies of Asian countries.

The series of measures taken by the Japanese Government was as follows (in chronological order):

[1] Bilateral assistance within the international framework centered on the IMF (from August to December 1997)

[2] Emergency Measures for such as the Economic Stabilization of Southeast Asia (February 1998)

[3] Comprehensive Economic Measures (April 1998)

[4] New Miyazawa Initiative (October 1998)

[5] Emergency Economic Measures (November 1998)

[6] Second Stage of the New Miyazawa Initiative (May 1999)

Among these measures, the New Miyazawa Initiative, which was announced at the IMF/World Bank Annual Meeting in October 1998, declared preparation of a financial support scheme totaling 30 billion dollars in scale, including medium and long-term financial assistance by Yen Loans, loans from the Export-Import Bank of Japan, etc., to bring about the recovery of the real economies of Asian countries. It was the largest support package in the series of support measures. The provision of such a large credit line made clear Japan's solid attitude toward providing support to countries in crises and served as a major backing for the restoration of the international confidence of these countries. In addition, specific support under this initiative also included social safety net Yen Loans (approximately 0.38 billion dollars in March 1999) which contained job-creation, health care, nutrition programs, etc. for Indonesia. When implementing the support, the Japanese Government gave full consideration to those who fell into poverty due to the impact of the crisis. In addition to these activities, Japan took such action as the provision of special Yen Loans (loans with concessive terms to affected countries in order to support economic structural reforms) and the introduction of a preferential interest rate system to support structural adjustment.

Other than these measures, Japan dispatched experts for improving the environment for human resources development, etc., implemented technical cooperation such as acceptance of trainees, emergency assistance for food and medical products, and provided grand aid for humanitarian/medical care/health measures.

Due to such measures, these Asian countries were able to overcome the crisis in a short period.