MANILA, Philippines—Malacañang Thursday admitted that President Gloria Macapagal-Arroyo made a mistake in announcing that the World Bank had committed to infuse $10 billion into her proposed regional bailout fund.

The mea culpa came after the World Bank denied committing to any such initiative to help member countries of the Association of Southeast Asian Nations (ASEAN) cope with the global financial crisis.

Ms Arroyo claimed the agreement was reached in Washington in meetings with finance officials from the 10-member ASEAN and their partners from Japan, China and South Korea and multilateral lending institutions.

One of Ms Arroyo’s economic advisers, Albay Gov. Joey Salceda, said the President was “probably just too excited with her announcement.”

“The President should not be blamed for it,” said Trade Secretary Peter Favila.

“Instead of bickering and finger pointing on an issue that can easily be clarified, we should work on getting the much-needed facility in the midst of a world financial meltdown,” he said.

Favila said Finance Secretary Margarito Teves had phoned him from Washington Thursday afternoon, clarifying that there was indeed a financial commitment.

But it came not from the World Bank but from the International Monetary Fund (IMF).

Notes point to IMF

“He went over his notes and saw it was the IMF, not the World Bank,” Favila told reporters four hours after a Palace briefing seeking to clarify the confusion.

“The IMF mentioned a $10-billion facility for Southeast Asia, not the World Bank,” Socioeconomic Planning Secretary Ralph Recto said in a separate interview with ANC news channel.

Recto said the allocation for each country was computed based on the size of its economy, and $1.3 billion was projected for the Philippines.

"As far as the Philippines is concerned, there is an available standard facility of roughly $1.3 billion. This facility is for those countries that have problem regarding balance of payments, we do not have a problem and therefore we might not even need the facility," he said.

Teves and Recto went to Washington to attend the recent annual World Bank and IMF meetings and to initiate discussions with ASEAN finance ministers on Ms Arroyo’s proposed regional crisis fund.

Hours before he came up with the IMF angle, Favila blamed the mistake on the supposed lack of coordination between Jim Adams, World Bank vice president for East Asia and the Pacific, and Bert Hoffman, World Bank country director for the Philippines.

Hoffman denied Ms Arroyo’s announcement, saying that the World Bank had made no commitment to the proposed regional bailout package.

“We, here in the Philippines, we are well-coordinated,” the trade secretary said.

Not discussed

But in a statement in Washington, Adams said the World Bank did not anticipate the establishment of such a fund and had not “discussed commitments of funds at the regional level.”

“East Asian economies continue to perform strongly and have made significant changes since the 1997 Asian financial crisis, making them more resilient to the impact of the current global turbulence,” Adams said.

He said Asian economies like all countries must be prepared to deal with any effects of the turmoil.

Adams confirmed that numerous discussions with individual governments were held during the recent annual meetings of the World Bank and the IMF, and the institutions “stand ready to support all of our member countries across East Asia to deal with the challenges arising from the financial crisis.”

He said that the bank’s private sector arm, International Finance Corp. (IFC), was considering setting up a $1-billion special fund to recapitalize small- to medium-sized banks in poor countries with insufficient government capacity.

Adams said IFC may raise another $2 billion or more.

Favila said Adams’ statement superseded Hoffman’s denial, citing Adam’s statement that the World Bank would continue to support the regional initiative being pushed by Ms Arroyo.

“I think there’s a problem between Hoffman and his boss,” Favila said at a briefing in Malacañang called by Ms Arroyo to clear the confusion.

Earlier Thursday, Favila took pains to explain the World Bank's denial of the announcement made by Ms Arroyo on Wednesday that it had committed $10 billion for an ASEAN standby fund.

Favila said the President made her announcement based on a report from Teves following a first round of meetings with the World Bank in Washington.

"The amount of $10 billion, as confirmed by Secretary Teves, was conveyed by him [to the President] after the initial meeting in Washington. It was a private closed door meeting with the ASEAN finance ministers, the $10 billion was discussed," he said earlier.

But during a second meeting, the World Bank made no commitment for a $10-billion funding, and instead proposed a bilateral approach that would see it dealing with ASEAN member countries individually, Favila said.

"Ang lumabas, hindi solid for ASEAN [It turned out that it would not be solid for ASEAN]… They are shifting discussions from a regional facility to a bilateral facility," Favila said.

The President was not informed of the results of the second meeting, he said.

Ms Arroyo first made the announcement at the induction ceremonies for new officers of the Union of Local Authorities of the Philippines in Malacañang on Wednesday morning.

She made the same announcement at the dinner she hosted later that night for delegates of the ASEAN 100 Leadership Forum in Malacañang.

Favila said Ms Arroyo received information about the $10-billion World Bank package from Teves.

Favila said the matter was discussed at Teves’ meeting with ASEAN finance ministers and officials from World Bank, IMF and the Asian Development Bank in Washington.

But Favila said Ms Arroyo was not made aware that the $10-billion package was no longer brought up at a second meeting involving the same officials.

“The President merely relied on the inputs of Secretary Teves,” he said.

Better in the long run

Salceda also came to the President’s rescue, saying that her original proposal of a regional approach to the financial crisis would be better in the long run for ASEAN.

“She was probably just too excited with her announcement, but she will be vindicated down the road,” he told the Philippine Daily Inquirer (parent company of INQUIRER.net). “The regional approach will be more effective and efficient.”

Favila said it was up to the ASEAN secretariat to determine the feasibility of pushing for the proposal for the World Bank to inject $10 billion into the planned regional bailout package.

In a text message to Ms Arroyo Thursday morning, Teves said the “guidelines and implementing mechanisms” developed by the secretariat would be up for approval “on principle” by ASEAN members during the Asia-Europe Meeting in Beijing next week.

Teves said the mechanisms would be discussed in greater detail during a proposed gathering in Manila on Nov. 12. Results of the meeting would be made available to heads of state during the ASEAN conference in Bangkok later this year, he said.

“What is important is for the implementing guidelines to be consistent to the shared principles that the facility should be fairly sizable, quick disbursing and with minimum conditionalities,” he said in the text message, which was read to reporters by Favila.

“The institutions should not dictate on us what we need,” Favila said. “We should tell them.” With a report from Associated Press