The Chavalit government has once again exhibited its apparently-infinite ability to disappoint financial markets through its watering down of the ''comprehensive" financial restructure package and its buy-time strategy so that failed finance companies can try to preserve their narrow interests.

Instead of quickly resolving the problem of the 58 suspended finance companies, so that it can concentrate on the more crucial task of saving the remaining 33 companies and the 15 commercial banks, the government ends up with a disappointingly-miscellaneous package, marred by political interference and vested-interest lobbying.

Embarrassingly, the government will not be able to keep its promise to deliver a comprehensive financial restructure package. As it turns out, the Cabinet today will only deliberate the broad regulatory framework within which the financial system problems are to be resolved.

Whether due to bureaucratic delay or political meddling, the five Royal decrees to accompany the financial restructure package cannot be finished in time. Not until Friday will the Cabinet hold a special meeting to deliberate the Royal decrees, which will cover the creation of a Financial Restructure Agency, Deposit Insurance Corporation and Asset Management Corporation; and amendments to the Bank of Thailand Act, the Commercial Banking Act and the Finance Company and Credit Foncier Act. Since mere words will not win back public confidence in the financial system, the government has to resort to legalising its deeds.

So instead of having a comprehensive package on hand today for a big-time PR blitz, the government will be announcing piecemeal measures that will further confuse rather than enlighten the public as to when to expect all the uncertainty in the financial system to be brought to an end.

After once lobbying the prime minister and twice calling on Chat Pattana Party leader Chatichai Choonahavan to try to win sympathy for their plight, representatives of the 58 finance companies have succeeded in buying time, in hopes of salvaging at least some of their wreckage.

The guidelines to re-open the finance companies to business may look tough, particularly the capital adequacy ratio of 15 per cent in the first year of rehabilitation, 12 per cent in the second year and 10 per cent in the third year, but the government will not be too mean. The Financial Institutions Development Fund, which has altogether lent out Bt430 billion to them to cushion a run on their deposits, has been ordered to bail out the failed finance companies by converting its loans to them into equity. The ratio is not more than 33 per cent of the total amount of the capital increase for a finance company or overall 25 per cent of the paid-up capital.

Provisions on loan-loss reserves of the rehabilitated finance companies are tax deductible. Moreover, the failed finance companies which have submitted rehabilitation plans may extend the repayment period to the Financial Institutions Development Fund for eight years at an interest charge quoted by the fund.

The 16 finance companies ordered to shut down their lending business in the first round now have another chance to breathe. They will be allowed to resubmit their rehabilitation plans ''as quickly as possible", disregarding the Oct 10 deadline.

It is no wonder that Amaret Sila-on, chairman of the panel looking after the financial institution mergers, resigned from his post on Saturday and described the government's handling of the financial institution problem as a ''political football".

''If this is everything, I think the [equity] market will be fairly disappointed ... there is no forced restructuring of the sector. We have tried this before ­ it doesn't work," Gerard Kruithof of Deutsche Morgan Grenfell was quoted as saying.

The measures on the revitalisation of the remaining 33 finance companies and 15 banks are not as tough as earlier indicated, although several research reports have indicated that the financial system as a whole will require somewhere between Bt200 billion to Bt400 billion in fresh money for recapitalisation.

Beginning Jan 1, 1998, the financial institutions will have to stop accruing interest incomes for any loans that have missed payments for six consecutive months, instead of the present 12-month guideline. Any non-performing loans of more than six months, with collateral, have to be classified as substandard debts and will need a provision of loan-loss reserves of 15 per cent of the total ­ not 20 or 25 per cent as earlier indicated.

Doubtful debts or bad debts will need full provisions of 100 per cent. The capital adequacy ratio will be kept unchanged at 8.5 per cent for banks and 7.5 per cent for finance companies.

The problem is that the government will not come out to admit how large an amount the non-performing loans in the financial system is or when it expects the bad debts will peak. Without a clear picture of this, accompanied by a sweeping recapitalisation plan for the financial institutions, it will be tough going to win back confidence from the public and international investors.

Administering the financial restructure package demands a government of high credibility, yet the political horse-trading that is taking place between the Chat Pattana and New Aspiration parties demonstrates even more confusion at the top policy-making levels, where it is unclear who is really in charge of economic matters.

Dr Virabongsa Ramangkura, the deputy prime minister, will be limited in his role to looking after Thailand's compliance with the International Monetary Fund-prescribed economic austerity programme, while Korn Dabaransi, the deputy prime minister and industry minister, will take over the power of managing the country's economy.