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Tuesday, September 15, 1998

Thailand economic reforms progress `exemplary,' says IMF 

Chris Johnson  
Bangkok, Sept 14: The International Monetary Fund's (IMF) representative in Thailand Reza Moghadam praised Thailand's economic reform package on Monday, saying its progress had been "exemplary" so far.

Reza told Reuters Television the government's reform timetable was progressing very well but the IMF would monitor the process closely.

"The progress has been remarkable. A lot of work has been done," Reza said in an interview.

"Thailand is fortunate to have a determined and good economic team. Progress so far is exemplary. Thailand has set a very enviable record in the region and worldwide in terms of compliance with the programme and the results are good."

The IMF has arranged and led a $17.2 billion bail-out fund to help the beleaguered Thai economy, which has plunged into recession following a collapse in the Thai baht on foreign exchange markets a year ago.

The package was linked to a comprehensive series of economic reforms to help restore confidence in the Thai financial system.

In August,Thailand announced a fundamental banking reform, which will result in the closure of four of the country's 15 banks and the creation of up to $7.2 billion in domestic bonds to help refinance the ailing banks.

Of the total pledged in the IMF package, more than $12 billion has already been disbursed.

Asked if the IMF, which has faced recent funding problems, would be able to provide Thailand with the rest of the promised funds, Reza said the money had already been earmarked and was absolutely secure.

He said he supported the Thai government's decision not to raise additional foreign funds at this time.

"We would very much support the government statement, the reserves position is comfortable," he said.

Turning to the Thai baht, Reza said the currency's recent stability on foreign exchange markets was a clear sign of returning confidence in Thailand.

The baht plunged to a low of 56.9 to the dollar at the beginning of the year, from around 25 to the dollar before the crisis, but it has recentlysteadied at a little below 40.

Reza noted Thai interest rates had already fallen sharply and said easing rates were essential for economic recovery. He said he saw rates falling further.

"There is certainly more room in terms of lending rates," Reza said.

Asked if Thailand should impose the type of capital controls introduced recently by Malaysia, Reza replied that they were not needed.

He noted Thailand had imposed strict currency controls last year but that these had been removed in January.

Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.


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