IMF measures blamed for deflationary push<\/p>\n
NEW YORK (AP): IMF-prescribed austerity measures in Thailand,
\nIndonesia and South Korea have caused deflationary conditions and
\nAsia must rely on exports to overcome its financial problems,
\nThailand's deputy prime minister said Friday.<\/p>\n
\"The IMF measures have not always shown the right result,\"
\nSupachai Panitchpakdi told a conference on challenges and
\nopportunities of the Southeast Asia crisis hosted by Columbia
\nUniversity Business School.<\/p>\n
Referring to countries that have received assistance from the
\nInternational Monetary Fund, he said, \"Fluctuations in currencies
\nare determined excessively by moods and financial markets.\"
\nSupachai, who also is minister of commerce, said the currency
\nfluctuations that have taken place in Asia seem to be
\n\"exaggerated\" by the excessive role of international fund flows
\nover trade considerations.<\/p>\n
He said Thailand's growing current account surplus reflects a
\ndecline in imports rather than an increase in exports. He noted
\nthat Thailand's imports in general have been declining by an
\nannualized rate of 13 percent to 14 percent for the last several
\nmonths.<\/p>\n
\"For exports, it's a difficult time for Asia,\" because
\ncompeting economies of the region have devalued their currencies
\nat the same rate, he said.<\/p>\n
Supachai called this \"alarming,\" and said it was caused in a
\nlarge part by the deflationary burdens of the Asian crisis.<\/p>\n
To overcome the current problem, Supachai said Thailand needs
\nto overhaul its financial systems, continue trade and investment
\nliberalization, maintain fiscal discipline and reduce state
\nownership.<\/p>\n
The Thai commerce minister said that the austerity steps must
\nbe supplemented with restructuring efforts, including increasing
\nagricultural productivity.<\/p>\n
He said interest rates are likely to remain at their current
\nhigh levels through the end of 1998.<\/p>\n
However, he would not rule out easing interest rates.
\nAmong other points at the one-day conference:<\/p>\n
* The East Asian currency crisis is expected to reduce the role
\nof the U.S. dollar in the region's exchange rate regime. This is
\nbecause the economies in the area have diverse linkages with the
\nrest of the world in trade and foreign direct investment, said
\nMasahiro Kawai, professor of economics at Tokyo University.<\/p>\n
\"It is more appropriate for the East Asian economies to
\nstabilize their exchange rates with respect to a basket of
\ncurrencies consisting of not only the U.S. dollar but also the
\nJapanese yen, the euro (after Jan. 1, 1999), and some other
\ncurrencies,\" he said.<\/p>\n
* Large swings in exchange rates among the ASEAN countries
\nwould be counterproductive because they would \"alter
\ninternational price competitiveness suddenly\" and make the
\nprospective ASEAN Free Trade Agreement -- expected to be completed
\nby 2003 -- unsustainable, Kawai said in his speech.<\/p>",
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