Int'l donors pledge $16b for Thailand

Int'l donors pledge $16b for Thailand

TOKYO (Reuter): The international community came to the
rescue of financially strapped Thailand yesterday, pledging a
total of US$16 billion in loans from the International Monetary
Fund (IMF) and Asian nations led by Japan.

The offer is the largest loan package to a single country
since the IMF and donors led by the United States made nearly $40
billion available to Mexico in 1995.

Indonesia will contribute $500 million to the package,
IMF deputy managing director Shigemitsu Sugisaki told a news
conference.

Thailand -- long one of Southeast Asia's booming "tiger
economies" -- had been looking for $12 billion to $15 billion to
plug financial holes created when it floated its baht currency
last month after failing to defend the currency from speculative
attacks.

Sugisaki said that the IMF had estimated that Thailand needed
funds in the order of $14 billion for 1997 and 1998 and that
participants had supported the request.

"The meeting proceeded very smoothly and positively. Some $16
billion in financial support was promised, including the proposed
IMF contribution of $4 billion," Sugisaki said.

"The measures they have taken and are going to take will send
a good, strong signal to the market and the Fund (IMF) management
is going to propose a strong package to the highest board for its
consideration," Sugisaki said.

He said that Malaysia and other Asian countries had taken
steps to make sure there was no spillover effect from Thailand's
problems.

Thai Finance Minister Thanong Bidaya told the news conference
that the package would basically be used to shore up Bangkok's
foreign reserves.

Japan, which hosted the meeting, pledged to match the $4
billion to be provided by the IMF.

"This very credible economic adjustment package and financing
package for Thailand should restore calm to financial markets in
this region and restore calmness to the currencies of this
region," Joseph Yam, Hong Kong Monetary Authority chief
executive, told Reuters Financial Television.

The United States did not pledge individual aid, but will
support the package through the IMF, Sugisaki said.

Australia, Malaysia, Singapore and Hong Kong pledged to
contribute $1 billion each to the effort, while South Korea and
Indonesia would each give $500 million in loans, Sugisaki said.

Contributions from China, which is seriously considering
joining the aid package, and funds from the Asian Development
Bank and World Bank may provide another $3 billion of the total.

Bangkok last week unveiled an austerity package to meet IMF
demands, raising its value-added tax, announcing plans to cut its
current account deficit and closing more than half of its
financial institutions.

Also yesterday, Thailand's cabinet approved a broad outline to
cut its 1997/98 (October-September) budget by 50 billion to 70
billion baht ($1.6 billion to $2.3 billion).

Thai exports, meanwhile, rose about 23 percent year-on-year in
July following the baht's more than 20 percent depreciation last
month, the Thai Customs Department said yesterday.

"We realize the devaluation of the baht will create some
inflationary pressure in Thailand but somehow we feel it is a
necessary step to make Thai exports more competitive," Thanong
said, adding he hoped to keep inflation below 10 percent while
reducing the current account deficit to about 5 percent this
year, and 3 percent in the following two years.

Thailand has $89 billion in foreign currency debt and Japanese
banks are owed about half that amount, he said.

Solidarity -- Page 10