* ADB says can offer assistance to deal with H1N1 flu
* Eyes $32.9 bln loans in 2009-2010 vs $22.4 bln in 2007-2008
* Establishes new facilities to counter downturn
NUSA DUA, Indonesia, May 2 (Reuters) - The Asian Development Bank (ADB) is prepared to provide assistance for countries in the region to cope with possible spread of the H1N1 flu, as it did during the SARS outbreak, its president said on Saturday.
Haruhiko Kuroda said it would be hard to assess the economic impact of the influenza outbreak on Asia since the region has not been badly affected so far, but cautioned that tourism, aviation and related industries could be hit.
“The swine flu is going to become quite serious, but there is a great uncertainty. At this moment, Asia is not much affected by this new influenza but we must be prepared to take necessary action,” Kuroda told a news conference at the start of the bank’s annual meeting on the Indonesian resort island of Bali.
The donors and members of the Manila-based multilateral lender begin discussions on Monday.
The World Health Organisation raised its alert level on the influenza outbreak to phase 5 this week, meaning a pandemic is imminent. But although the virus is blamed for the deaths of up to 101 people Mexico, only one death has been reported outside the country. [ID:nN02351116]
“We have had SARS and avian flu few years ago, through this experience, we are well prepared for this kind of communicable disease and ADB would be prepared to provide any necessary financial assistance,” Kuroda said.
SARS, or Severe Acute Respiratory Syndrome, swept through East and Southeast Asia in 2003 and the ADB estimates the region lost about $18 billion or 0.6 percentage points of GDP because of the outbreak.
Kuroda also said the ADB was taking steps to counter the global downturn, and would raise total lending to around $32.9 billion in 2009-2010 from around $$22.4 billion in 2007-2008.
The additional amount of about $10 billion includes $1 billion in trade financing and $3 billion in a counter-cyclical support facility (CSF), Kuroda said.
“The CSF will provide emergency loans faster and cheaper than under ADB’s existing special loan facilities. I believe this will be a very welcome initiative to assist faltering economies and, most importantly protect the poor from the worst impact of the crisis,” Kuroda said.
TRIPLE CAPITAL BASE
The financial crisis and the risk aversion it has prompted means many Asian countries will struggle to raise funds and will need to rely on other countries or multilateral lenders such as th ADB.
The lender said in a statement on Thursday it would triple its capital base to $165 billion to increase lending to emerging Asian economies, all of which have been hit first by last year’s spike in prices and later the global economic downturn. [ID:nHKG287337]
Confronted by the downturn, the 13 countries of the Association of Southeast Asian Nations plus Japan, China and South Korea have also agreed to boost a currency swap agreement to $120 billion from $80 billion.
The multilateral pool will replace a network of bilateral currency swap arrangements sealed under the Chiang Mai Initiative (CMI) to help member countries avoid a repeat of the 1997-1998 financial crisis when several currencies buckled in the face of capital flight from the region.
Kuroda said the countries have agreed to launch the emergency fund but have yet to agree on how the fund will be put together and how to operate it.
Japan, China and South Korea, who together have more than $3 trillion in foreign exchange reserves, have agreed to chip in 80 percent of the total funds but have yet to agree on individual stakes between them.
* www.adb.org/AnnualMeeting/2009 for details of the ADB's annual meeting
* [nFLU] for full coverage of the deadly flu
* [ASIA-ECI-NEWS] for recent stories on Asian economies (Reporting by Gde Anugrah Arka; Editing by Raju Gopalakrishnan and Valerie Lee)
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