The amended Chiang Mai Initiative Multilateralization agreement took effect on June 23, offering a stronger currency swap arrangement and financial safety net among Association of Southeast Asian Nations member-states and their partner-economies in the region.
The International Finance Group of the Department of Finance said all finance ministers and central bank governors of ASEAN and “Plus 3” partners Korea, Japan and China, along with the Hong Kong Monetary Authority, signed the amended agreement.
Finance Secretary Carlos Dominguez III signed the amended CMIM in December 2019, while the Minister of Finance, Planning and Industry of Myanmar signed it on June 16, completing all 27 signatures needed for the amended CMIM agreement to be in force.
The original CMIM, which came into effect in March 2010, aimed to address balance-of-payments and short-term liquidity difficulties in ASEAN and its partners.
The current size of the CMIM has since doubled to $240 billion and its International Monetary Fund-delinked portion has since been raised to 30 percent, which means member-economies could draw up to 30 percent of their maximum borrowing amount, without being subjected to lending conditions set by the IMF.
The IFG reported that among the key points in the amended CMIM is the flexibility on the supporting period for financing linked to IMF-lending conditions. This will be done by allowing multiple renewals to match the supporting period of the IMF-supported programs.
Adjustments of the other financing terms under the CMIM, such as the disbursement date, have also been made to secure consistency with the IMF-supported program, in the case of co-financing arrangements.
The amended agreement also strengthened the CMIM’s coordination with the IMF by establishing a set of operational guidelines, which aims to create a shared view on economic and financial situations, financing needs and policy recommendation for co-financing.
The modalities of early information-sharing with IMF have been aligned with this strengthened coordination process.
Under the amended CMIM, a legal basis for conditionality was introduced that applies to both facilities–unlike before when conditionality only covered the CMIM-PL In the case of co-financing with the IMF, the CMIM now requires that the conditionality should be consistent with that of the relevant IMF-supported program.
As a signatory to the CMIM, the Philippines may be able to borrow up to $22.76 billion from the facility to help avert an impending or actual BOP crisis. In turn, the Philippines will also be able to provide liquidity assistance to another CMIM member if needed.
