Asian economic can be contained: IMF official

Asian economic can be contained: IMF official

BOSTON (Reuters): Asia's financial crisis can be contained, provided governments implement reform programs agreed on with the International Monetary Fund, a senior official of the fund said Friday.

Shigemitsu Sugisaki, deputy IMF managing director, also said it was important and urgent to boost IMF resources. An deal between Indonesia and its bank creditors should help restore confidence in the banking system there, he said.

Sugisaki, one of three deputy managing directors of the IMF, spoke to Reuters before addressing a conference organized by the Harvard Business School at which he said financial-sector reform was the key to Asia's recovery.

"If the programs are implemented by the governments, with financial assistance from the international financial institutions and the national governments, together with the private bankers, (the crisis) will be contained," Sugisaki told Reuters.

The IMF has put together rescue deals worth more than $100 billion for Indonesia, South Korea and Thailand since last July's crash of Thailand's currency, the baht, sent shock waves across Asia. Payments depend on reform of the countries' economies on lines approved by the fund.

Sugisaki said the agreements with the three Asian countries were strong and adequately funded programs and Indonesia's plan was good enough to enable the country to "weather the storm."

The IMF and Indonesia renegotiated the terms of a $40 billion loan agreement earlier this month after the rupiah plunged on doubts about whether the government was committed to the tough measures the IMF was demanding.

"President Soeharto himself signed the program, which is unusual," Sugisaki said. "He is determined to implement the program, and its implementation is proceeding. With these measures implemented, we believe they could weather the storm."

Sugisaki, speaking after top administration officials appealed to U.S. lawmakers to approve an additional $18 billion in U.S. funding for the IMF, said the fund needed to strengthen its resources.

"Certainly for the IMF to continue its role, which is unanimously supported by our shareholders, the strengthening of the IMF resources is important and urgent," he said.

The funding request faces stiff opposition in Congress, where lawmakers say the bailouts ignore the needs of workers and, by flooding markets with cheap Asian goods, would destroy American jobs.

The U.S. money would help create a new lending mechanism to deal with global financial emergencies and to increase the funds available at the IMF to lend on to countries in trouble.

Administration officials said on Friday the money was needed sooner rather than later.

"We should not hold back on the funding for the IMF... because if we have a crisis in the interim, we would not have anything to go with," Treasury Secretary Robert Rubin said.