Thailand’s Prime Minister Abhisit Vejjajiva (L) speaks at the ASEAN secretariat as ASEAN Secretary-General Surin Pitsuwan listens in Jakarta February 21, 2009.

An expansion of a currency swap agreement among Asian countries will be discussed by finance ministers meeting this weekend but a deal may not be signed until May, a senior Thai official said Saturday.

The 10 members of the Association of Southeast Asian Nations (ASEAN) plus Japan, China and South Korea pledged last year to pool bilateral currency swap arrangements under the Chiang Mai Initiative (CMI) in an US$80 billion multilateral fund that could be tapped in emergencies.

The finance ministers meeting on the resort island of Phuket today will consider increasing the size of that arrangement, probably to $120 billion.

Suparut Kawatkul, permanent secretary at the Thai finance ministry, told reporters the ministers would look at details about expanding the CMI that were thrashed out by senior officials at a recent meeting in Japan.

“I hope we should be able to make some progress… This will be formalized at an ASEAN+3 finance ministers’ meeting in Bali in May,” he said.

“The figure has yet to be finalized but the meeting in Japan suggested $120 billion.” ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, countries with vastly different political and economic systems.

ASEAN+3 comprises those 10 plus Japan, China and South Korea.

In addition to the currency pact, this weekend’s meeting would look at ideas that the region wanted to pass on to an upcoming Group of 20 meeting on the financial crisis.

Most ASEAN members are heavily reliant on demand from the US and the euro zone, which have both slumped into deep recession under the impact of the financial crisis.

Their currencies have been battered in recent months, adding urgency to getting the currency swaps agreement.

The idea behind the swap is to allow countries hit by short-term liquidity shortages to borrow foreign reserves from other countries to absorb selling pressure on their currencies.

On Thursday, Asian Development Bank President Haruhiko Kuroda urged Asian countries to cooperate on foreign exchange rates and make the currency swap network more effective, suggesting they should be able to raise the size of the swaps without the need for IMF-mandated reform programs.

Most bilateral swap lines in the network are designed to cope with emergencies such as a balance of payments crisis, and 80 percent of the funding is linked to IMF-mandated programs.

Source: Reuters