Malaysia has no need to seek IMF bailout: Analysts<\/p>\n
KUALA LUMPUR (AFP): Malaysia has no need to seek assistance
\nfrom the International Monetary Fund (IMF) as its exchange
\nreserves and short-term debts are still at manageable levels,
\nanalysts said yesterday.<\/p>\n
But the country may have to seek soft loans from individual
\ncountries to ease problems arising from its ailing currency and
\nfears that corporations may not be able to meet their foreign
\ndebt obligations, they said.<\/p>\n
Simon Flint, regional economist at Singapore-based research
\nhouse IDEA, said Malaysia was \"not even significantly closer\" to
\nseeking IMF help.<\/p>\n
\"I must stress that all those countries under IMF tutelage
\nhave a serious balance of payments imbalance ... Malaysia
\ndoesn't,\" Flint told AFX-Asia, a financial news wire affiliated
\nto AFP.<\/p>\n
Although the Bank for International Settlements (BIS) recently
\nrevealed that Malaysia has a surprisingly large amount of short-
\nterm debt, the country has sufficient reserves to cover it, he
\nsaid.<\/p>\n
In a recent report on national debt levels, the BIS said
\nforeign bank loans to Malaysia rose 43 percent year-on-year to
\n28.8 billion dollars as of June last year.<\/p>\n
Flint said the IMF stance was to address the overall balance
\nof payments side but \"Malaysia is in need of liquidity to help
\nthe export and export supporting industries.\"<\/p>\n
Sani Hamid, emerging markets analyst at MMS International in
\nSingapore, agreed that Malaysia was unlikely to seek an IMF
\nbailout.<\/p>\n
There was not \"that big a foreign debt, unlike Indonesia,
\nThailand and Korea who have large debts maturing and creditors
\nnot rolling over (the loans),\" Sani said.<\/p>\n
\"That there will be corporate failures is a certainty; the
\nquestion now is -- how many will go under,\" he added.<\/p>\n
Indonesia, Thailand and South Korea have all received multi-
\nbillion-dollar IMF-led bailouts in recent months to overcome a
\nsevere financial crunch.<\/p>\n
One senior economist at a local brokerage who declined to be
\nnamed said Malaysia was unlikely to need IMF assistance to bail
\nout local companies.<\/p>\n
\"I don't think that our problems will be solved even if we go
\nto the IMF for help. An IMF package would drive the economy into
\na recession... corporate earnings will also come down
\ndrastically,\" he said.<\/p>\n
\"Maybe by going to IMF, we will be able to restore some
\nconfidence but I think it will only be a temporary thing,\" he
\nsaid, adding that the ringgit's slide to below four to a dollar
\nshould not cause any alarm as other regional currencies have also
\nsimultaneously weakened.<\/p>\n
He said Malaysia's government external debt at the end of
\nSeptember was 10. 9 billion ringgit (US$2.5 billion), with the
\ntotal for the year estimated at 11 billion to 12 billion ringgit.<\/p>\n
A Singapore-based economist said Malaysia's foreign currency
\ndebt comprised a small percentage of its gross domestic product
\nwhile its external debt problem dwarfed in comparison to
\ncountries that have sought IMF help.<\/p>\n
But he said Malaysia faces a huge domestic debt burden as a
\nresult of excessive lending. \"Although Bank Negara has taken
\nsteps to curb lending, loans growth is not slowing down fast
\nenough,\" he warned.<\/p>\n
Multinational corporations such as Tenaga Nasional Bhd. and
\nTelekom Malaysia Bhd. may face difficulties in servicing their
\nEurobond obligations but the problem was not widespread, the
\neconomist said.<\/p>\n
On the other hand, the federal government has a cleaner bill
\nof health, having pre-paid external debt over the past couple of
\nyears.<\/p>",
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