'Next govt likely to follow Chuan's reforms'

June 16, 2000

ANY new government taking office this year is likely to continue the economic and financial reform programme pursued by the present government over the past two-and-a-half years, senior executives of the IMF said yesterday.

It will be rather tough for any new government to change track because it will face the same fundamental problems of having to deal with the banking sector and corporate debt restructuring, Rangjit Teja, head of the IMF mission to Thailand, and his colleague, Carl Johan Lindgren, said.

The Thai Rak Thai Party has been advocating an anti-IMF platform, vowing to use government money to buy bad debts in the banking sector and to relax banking standards so that banks have more breathing space to lend money to the cash-strapped corporate sector.

Both Teja and Lindgren said that since the Thai economy has been able to stage a recovery of 4.5 to 5 per cent annual GDP growth despite a weak banking sector, there is no further need for the government to buy bad debts. Exports and domestic consumption are driving the recovery, and the banking sector, which must be tackled without complacency, will pick up later, they said.

Thailand will graduate from the IMF programme on Monday, having withdrawn about US$14 billion (Bt547 billion) from its total standby credit of $17.2 billion. Confidence in the financial system has been restored and the external accounts - chiefly the current account - have been brought under control.

Thailand has also adopted a floating exchange rate and started reforming institutional and legal frameworks to spur ongoing recovery.

BY THANONG KHANTHONG