Thailand needs loans to boost foreign reserves<\/p>\n
BANGKOK (AFP): Thailand needs an additional US$8 billion in
\nloans to augment its existing International Monetary Fund (IMF)
\nbailout package and boost foreign reserves, a report said
\nWednesday.<\/p>\n
Thailand Development Research Institute (TDRI) president
\nChalongphob Sussangkarn said the central bank would need more
\nmoney next year to shore up foreign reserves, stabilize the baht
\nand bolster market confidence in the economy, the Nation
\nreported.<\/p>\n
Chalongphob said the Bank of Thailand's reserves had fallen
\nsignificantly despite IMF aid because foreign investors are
\nselling baht for dollars for fear the reserves will not be enough
\nto meet the country's huge debt obligations.<\/p>\n
The IMF approved a bailout package worth $17.2 billion in
\nAugust, to ensure Thailand stays solvent in the wake of the
\nbaht's decline.<\/p>\n
The TDRI forecast that $8 billion in additional standby credit
\nwould raise foreign reserves by about $3 billion above official
\nshort-term debt, the newspaper reported.<\/p>\n
That in turn would help push up the baht to 42 against the
\ndollar next year, Chalongphob said. The local currency is
\ncurrently hovering at around 47 to the dollar.<\/p>\n
The central bank Tuesday said official foreign reserves as of
\nDec. 15 stood at $26.9 billion. Thailand's short-term debt
\ncurrently stands at $39 billion.<\/p>\n
Chalongphob said the government would also need to borrow a
\nfurther $1.5 billion to finance ongoing projects due to a
\nshortage of funds and its bond issues being relegated to junk
\nstatus by Moody's Investors Service last week.<\/p>\n
He said his call for more funds was \"just an option to manage
\nThailand's foreign debt. The suggestion needs further study.<\/p>\n
\"We are not suggesting that this is an absolute answer, but at
\nleast it provides more options on how to mange the macroeconomic
\npolicy.\"<\/p>\n
If the government continues macroeconomic policy according to
\nthe IMF conditions but without additional loans, the baht will
\nstay at around 47 to the dollar next year, Chalongphob said.<\/p>\n
Under the IMF restructuring measures, Thailand should see
\nforeign reserves in balance with the country's short-term debt
\nposition in 1999, when the economy should register growth of
\nabout 0.1 percent, he said.<\/p>\n
But the economy would continue to contract in 1998, with TDRI
\nprojecting a decline of 2.2 percent and the baht continuing to
\nstay weak against the dollar and other currencies.<\/p>\n
Chalongphob said the additional $8 billion would help boost
\neconomic growth over the next two years, with the economy
\ncontracting by only 0.6 percent in 1998 and growing by 0.7
\npercent in 1999.<\/p>\n
TDRI forecast a 1998 current account surplus of $4.72 billion,
\nor about 3.9 percent of gross domestic product. Borrowing an
\nadditional $8 billion would cut the surplus to $3.55 billion, or
\n2.6 percent of GDP, the report said.<\/p>",
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