SINGAPORE, APRIL 3, 1999 -- There is ''a risk of complacency'' in Thailand's structural reforms, particularly the urgent need for banking recapitalisation, which might delay the pace of economic recovery, said a high-ranking official of the International Monetary Fund (IMF).

''Despite all the good things being said about Thailand lately, I am afraid that it might not be moving fast enough in structural adjustments or banking reform, '' said Kunio Saito, the director of the IMF's regional office for Asia and the Pacific.

''I don't want to turn this into a 'beauty contest' but it appears that Malaysia is going faster in terms of banking reform, probably because the government there has a greater degree of control,'' he added.

Although the Thai government this week announced a Bt130 billion economic stimulus package to jump-start the economy, several analysts say that it cannot be implemented effectively without accompanying banking reforms and corporate debt restructuring.

Saito said the risk of complacency over structural reforms might occur once the economy shows signs of improvement or share prices start to go up after a period of stabilisation.

''The banks or the private sector then might question the need for reforms while things appear to be improving,'' he said.

Saito insisted that the crisis-hit countries, including Thailand, cannot expect to experience sustainable recovery if they fail to be determined enough to make the necessary structural adjustments.

''I can understand the difficulties in banking reform because it involves new money and a change in management,'' he added.

A former Thai Cabinet member echoed Saito's concerns and pointed to the lack of a specific time frame to implement financial and corporate sector reforms in Thailand.

The Thai economy is being held hostage by the banks and corporations, who are not moving fast enough in cleaning up some Bt2.7 trillion in non-performing loans (NPLs) in the banking system.

The economic stimulus package can do very little in terms of turning things around as it represents the equivalent of 2.6 per cent of gross domestic product, whereas the problems, in comparison, account for about half of GDP. So, the economy cannot stage a sustainable recovery without unlocking the bad debts and pushing Thai companies back into the mainstream of the economy.

The former Thai Cabinet minister suggested that the government take radical action by requiring banks and corporates to clean up their bad debts within six months, or face the threat of harsh punitive measures.

Banks, Saito added, are unable to prepare public offerings for tier-1 recapitalisation because investors don't know exactly where the reform programme is going or how much public money will still be needed to tackle the banking system.

''If investors have a fair idea of how and when the NPLs are going to be dealt with decisively, they will start to buy bank stocks and help with the recapitalisation process,'' he added.