A cut in RI aid could hit Bangkok

A cut in RI aid could hit Bangkok

BANGKOK (AFP): The IMF has warned Thailand that its bid to
ease its economic woes could be hit by fallout if the world body
is forced to suspend Indonesia's rescue package, the finance
minister said yesterday.

"We have received warning from the IMF (International Monetary
Fund) to prepare well and to put in place cushioning measures in
case of any adverse effects," Tarrin Nimmanahaeminda told
reporters here.

The comments came after Indonesia said it would launch a new
foreign exchange system re-pegging the flagging Indonesian rupiah
to other currencies, a move which the IMF has strongly opposed.

The monetary body, which has come to the rescue of Thailand,
Indonesia and South Korea, extending billions of dollars in
bailout loans as the once booming economies stumbled, said it
would reconsider its aid to Indonesia if the currency board
system is adopted.

But Tarrin said the system had not yet been adopted by
Jakarta, "so we will have to wait and see what they actually do
decide."

The regional crisis started in Thailand when it devalued its
currency last July, and the contagion quickly spread across the
once thriving region.

A top IMF official last week gave Thailand the thumbs up for
its efforts to steady its rickety economy, saying it had "turned
the corner of the crisis, but said Indonesia was still in
"intensive care."

Meanwhile in Singapore, U.S. Commerce Secretary William Daley
reaffirmed yesterday Washington's opposition to Indonesia's plan
to peg its currency in the short-term, indicating Jakarta should
first stabilize its economy.

"At some later point down the road, when everything is back in
order, it's obviously up to the Indonesian government to deal
with that. But right now at this moment of difficulty that is not
the way to go," Daley said at a news conference.

Daley said the proposed currency board system, which would peg
the Indonesian rupiah to the U.S. dollar at a fixed rate, "may
not have merits at the immediate moment."

"I think we've been very clear in our statements of basically
agreeing with the IMF in their comments on the exchange board,"
he said, referring to strongly worded International Monetary Fund
warnings since last week.