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1998-99 Aid budget: responding to the East Asian crisis

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AA35 12 May 1998


Australia is committed to assisting the countries of East Asia respond to the development challenges presented by the current financial crisis.

' .>* T.Conomic growth and stability in Asia are in Australia’s national interest. In an increasingly globalised world, growth in developing countries expands Australian trade and investment opportunities, creates jobs, improves living standards and helps - secure a prosperous and stable future for Australia.

The current East Asian financial crisis, exacerbated in some areas by drought, is undermining the impressive growth achieved by the economies of the region. The crisis is also having a devastating effect on the lives and well-being of ordinary people, especially the poor.

Responding to the crisis in Asia is a central theme of the 1998-99 aid budget. Key initiatives are:

- establishment of a new Asia Crisis Fund ($6 million) to assist countries in the region, especially in economic governance, financial sector reform and employment generation. Activities will focus on ensuring appropriate policies are in place to foster development, for example through training, and technical assistance to strengthen public institutions. Assistance will focus on those countries most affected by the crisis, particularly Thailand and Indonesia;

< ^ - provision of $20 million in humanitarian assistance to Indonesia in response to the social impacts of the crisis and the drought that is affecting much of the country (part of the $30 million package I announced earlier in May). Assistance will include food aid, medical assistance, drought relief and employment generation activities;

- tripling of the emergency allocation to $34 million, enabling the Government to respond quickly to alleviate the suffering of victims of disasters such as the droughts and floods brought on by the El Nino phenomenon, and the social impacts of the East Asian crisis;


- provision of an additional $10.2 million to Thailand over the next two years and continue aid past 2000-01 when Australia’s aid was due to cease. Our support will include activities in the banking and finance sector and new scholarships for public sector training;

- the commencement of new four-year pledges of assistance to Vietnam and Laos ($236 million and $56 million respectively) in recognition of the continuing development challenges facing this region and the current and potential impact of the crisis;

- continuing to provide much needed assistance to other East Asian countries, such as the Philippines and China, targeting assistance to their most pressing development needs.

The assistance outlined above complements the support Australia has provided to Thailand, Indonesia and the Republic of Korea through the IMF. Australia is one of only two countries contributing to all three IMF packages.

Australia is helping East Asia manage the current crisis, maintain stability and ensure that the fundamentals are in place for continued growth and development. This will in turn contribute to Australia and the region’s long term economic, environmental and security interests.

Media contacts:

Innes Willox (Minister’s office) 02 6277 7500 / 0411 414 695

Michelle Hardy (AusAID) 02 6206 4968 or mobile 0417 680 590