IMF-World Bank to discuss currency crisis

IMF-World Bank to discuss currency crisis

SINGAPORE (AFP): Southeast Asia's currency crisis will come
under the microscope at this month's global monetary talks amid
complaints that a decade's economic gains are being undermined by
foreign financial speculators.

Regional authorities are expected to press the International
Monetary Fund (IMF) and the World Bank for measures to stabilize
financial systems and combat "rogue" speculators who have
hammered their currencies to all-time lows.

Officials said the impact of the unprecedented financial
market turbulence unleashed by the Thai baht's July 2 float will
be discussed in depth at the IMF-World Bank meetings in Hong
Kong.

"The annual meetings will discuss and try to draw lessons from
this," Hubert Neiss, head of the Asia and Pacific department at
the IMF, said of the agenda for the series of IMF-World Bank
meetings which open Sept. 15.

In Kuala Lumpur Thailand's Deputy Prime Minister Korn
Dabbaransi said on Saturday ASEAN finance ministers will take a
common stand on regional currencies at the IMF-World Bank annual
meetings.

Bernama news agency said Korn disclosed the plan after meeting
Malaysian Deputy Prime Minister Anwar Ibrahim who is also finance
minister.

"We will have our own meeting first in Bangkok and take a
stand on the currency issue. We will decide on ASEAN's position,"
he was quoted as saying.

Thailand is to host a meeting of Asian and European finance
ministers in Bangkok on Sept. 18 and 19. The ministers will then
fly to Hong Kong for the annual financial jamboree which brings
together finance ministers and central bank governor from across
the world.

In a recent visit to Singapore, Neiss acknowledged that the
"regional contagion" unleashed by the de facto devaluation of the
baht was "quite pronounced."

Neiss, who led the IMF negotiations of a 17.2-billion-dollar
rescue package for Thailand, described the effect as sharp and
long-lasting and noted it had jolted even countries with
"impeccable fundamentals like Hong Kong and Singapore."

The Thai baht has lost a third of its value against the US
dollar since the Bank of Thailand freed the currency, with its
economy in deep crisis amid massive bad debts surrounding its
finance sector.

The Indonesian rupiah, the Malaysian ringgit and the
Philippine peso have since hit a succession of all-time lows
under the onslaught of speculators. Even the normally unflappable
Singapore dollar has not been spared.

"The regional turmoil was really precipitated by the Thai
crisis," said Neiss, who traced Thailand's problems to "a very
high current account deficit, a very high short-term
indebtedness, a very weak financial sector and a very rigid
exchange-rate regime."

He said no other country in the region had such an "explosive
mixture" of shortcomings, but added that each country "may have
one or the other weakness which the present contagion has
exposed."

Singapore, with adequate cover against short-term foreign
liabilities, impressive foreign exchange reserves of some US$80
billion and a current account surplus, is the most resilient of
regional economies.

Indonesia, Malaysia and the Philippines all are saddled with
sizable current account deficits and foreign debt while their
finance sectors suffer from heavy exposure to the property
sector, economists note.

Amid growing frustration at the ceaseless speculative attacks,
the IMF has come in for criticism for failing to contain the
snowballing effect of the currency crisis.

Eddie Lee, regional economist at Vickers Ballas investment
house in Singapore, noted that present arrangements did not allow
for the IMF "to do anything unless the countries approach them."

But market forces themselves have taken on the role of a
watchdog of government policies and "increasingly, governments
are listening to the markets," he said.