World Bank: Asia healthier to handle crisis

James Wolfensohn, here speaking in his hometown of Sydney, says Asia is steeled for financial crisis

By CNN's Alex Frew McMillan and wire reports

SYDNEY, Australia -- Asia is in better shape to ward off a financial disaster than in 1997, the head of the World Bank said Thursday.

"It is much better geared to withstand a crisis," World Bank president James Wolfensohn told reporters.

The World Bank, one of the world's most important lenders, has at times been highly critical of the pace of reform in Asia.

It has stated that countries like Indonesia, the Philippines and Thailand need to do more to solve the problems that caused the 1997 crisis.

The World Bank has also pushed nations like South Korea to speed up change, particularly in dealing with the large amount of debt left in government hands.

Words of encouragement

But Wolfensohn had words of encouragement on Thursday, despite the prospect of fallout from Argentina's economic problems.

"I do not predict a crisis, but if one was to occur Asia is distinctly much better off," Wolfensohn said.

He said there is "little comparison between the situation today in Asia" and at the time of the rolling economic disaster that swept the region after the devaluation of the Thai baht.

World markets worried last month developing nations could be slammed if Argentina defaulted on $130 billion in government bonds.

That put investors off bond issues such as a $500 million offering in the Philippines. The 1997 financial crisis started when a bank crisis in Thailand revealed the shaky health of lenders throughout Asia.

Many banks were nationalized as they approached collapse. Asian nations have yet to shake off that government debt.

Tough times ahead

Asian economies are again fighting tough economic times. Japanese officials admit the region's biggest economy is likely in yet another recession. Singapore is already there.

Export-driven economies in South Korea and Taiwan are also slumping. Figures from Seoul showed Wednesday that Korea's exports plunged 20 percent for July, the fifth straight slump.

But Wolfensohn said the region is in better financial health. He also said he does not expect Argentina's problems to cause a crisis.

A Philippines official said Thursday the World Bank has earmarked $200 million for a new loan program in that country.

The World Bank is set to discuss at the end of August a possible $400 million loan package to Argentina.

Wolfensohn, now an American citizen, is on a brief visit to Sydney, where he was born, to launch an Internet education initiative.

The World Bank supremo has met peaceful antiglobalization protests in Australia.

"No one has succeeded in turning back globalization since Adam and Eve," he said Wednesday evening.

Reuters contributed to this report.