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.