Cabinet readies stabilization fund for war

Vice Premier Lin Hsin-yi, far right, attends a press conference at the Government Information Office yesterday to explain how the Cabinet plans to tackle the fallout from a possible US-led war against Iraq. PHOTO: SEAN CHAO, TAIPEI TIMES

With a war against Iraq apparently imminent, the Executive Yuan said yesterday that it was preparing to use the National Stabilization Fund to prop up the stock market if necessary.

"Although we hope that there won't be a need, we want to be ready at any given time," said Vice Minister of Finance Gordon Chen (陳樹).

"We'll also continue to keep close tabs on the daily activities of the stock market," he said.

Once any "irregularity" occurs, Chen said, a Cabinet committee in charge of the national stabilization fund will immediately meet to decide whether to use the fund to buy stocks.

To avoid any disruption to international trade, Chen said the ministry would help local exporters and importers obtain short-term credit if necessary.

Chen at an Executive Yuan press conference held by Vice Premier Lin Hsin-i (林信義), Minister of Economic Affairs Lin Yi-fu (林義夫) and Vice Minister of the Interior for politics Hsu Ying-shen (許應深).

According to Lin Hsin-i, it would be in the nation's interests if the war ended quickly.

"We estimate that GDP growth [this year] will climb from 3.6 percent to 3.7 percent if the war lasts between a few hours and six weeks," Lin said.

"However, we estimate it to drop to 2 percent if the war drags on for between six and 12 weeks and plummet to 0.3 percent if it lasts between 90 and 180 days," he said.

Oil are also estimated to skyrocket from US$35 to US$80 per barrel if the war lasts between 90 and 180 days.

According to Lin Yi-fu, the nation's oil reserves could meet demand for 119 days.

The legal minimum reserve is set at 60 days.

"The ministry will make sure that the state-owned Chinese Petroleum Corp obtains oil supplies from various sources such as central America and north Africa and constantly monitors stockpiles to ensure adequate supplies," he said.

Some percent of the nation's crude oil is imported from the Middle East, with about 18 percent of the supplies coming from Iraq.

The inventory of staples such as soy beans, corn and wheat can meet demand for two to three months, while supplies of rice can last for seven months.

To maintain economic growth, Lin Hsin-i said that the Council for Economic Planning and Development would push the initiatives mapped out in the six-year national development project.

The Ministry of Foreign Affairs and Overseas Chinese Affairs Commission will also try to ensure the safety of expatriates and help them return home if necessary.

The Ministry of Transportation and Communications may also provide insurance subsidies to shippers and airlines.