Is anyone else left in Doctor IMF's waiting room?

Is anyone else left in Doctor IMF's waiting room?

By Phil Smith

SINGAPORE (Reuter): Indonesia is the latest country to call on
the International Monetary Fund (IMF) for help but despite severe
economic problems elsewhere in the region, analysts doubt others
are in line for immediate treatment.

Indonesia is expected to get between US$4 billion to $6
billion and the IMF is already giving the Philippines a helping
hand of around $1.0 billion.

But both look like little more than a bad credit-card debt
compared to Thailand's bumper $17.2 billion aid package.

Looking elsewhere, analysts point to South Korea as a country
which may encounter difficulties at some stage, due to similar
problems.

South Korea is facing more corporate defaults than the rest of
the region and foreign exchange reserves have been run down to
defend the sagging won, they say.

These similarities bring it into sharp focus with the other
troubled nations in the region, particularly Thailand.

"The entire financial sector in Korea is in quite a lot of
trouble and not dissimilar to the Thailand situation," said
Jacqueline Ong, regional economist at I.D.E.A. in Singapore.
"The banks are extending loans to the huge corporates so if they
fail then the banks will be hit."

But it is not in the same league as Thailand in as much as the
balance of payments deficit is not nearly as bad.

While Thailand's gap has been widening, in South Korea it has
been forecast to shrink to 3 percent of gross domestic product
(GDP) in 1997 from around 5.0 percent in 1996.

The other country which has caught the Asian currency cold is
Malaysia, but again things here are different.

"The obvious candidate in the ASEAN four is obviously Malaysia
but I don't see it going to the IMF at this point in time," said
Chiang Yao Chye, head of Asia-Pacific research at CIBC in
Singapore.

This is because Malaysia has decided to go along a slow route
rather than try for a quick adjustment.

By keeping interest rates low at least the stock market is
holding up, which will delay any restructuring they need to do
and buy them some time.

"Malaysia is not facing the balance of payments crisis
Thailand was when it went to the IMF and the external debt is not
on the scale of Indonesia," Chiang added.

What about Taiwan, where a sharp fall in the Taiwan dollar at
the end of July has prompted massive central bank intervention?
There, foreign exchange reserves are an impressive $88 billion
and the authorities have been using them to good effect to
prevent a Southeast Asian-style currency crisis.

"I have to admit the financial sector in Taiwan is a little
weak because it hasn't been under very strict supervision...but
it is doing well on the external side and runs a current account
surplus so there's not a major problem," I.D.E.A's Ong said.

Other countries like Vietnam have also had currency problems
with the central bank there trying to cope with downward pressure
on the dong, but again analysts do not see any likelihood of IMF
intervention.

"It's too early in the development stage," CIBC's Chiang said.
"They do not have developed asset markets for large portfolio
investments flow in that would risk any sudden pull-out and spark
a crisis.

"A lot is FDI's (Fixed Direct Investment) and that is long
term in nature and the problems are not bad enough to affect FDI
flows unless there is the risk of financial collapse."

So in terms further IMF involvement in the region, little more
can be expected unless a disaster scenario develops and the whole
region goes into recession, and that is extremely unlikely,
analysts said.

The only IMF news that can perhaps be expected in the near-
term is an extension to the IMF's involvement in the Philippines.
IMF supervision is due to finish at the end of this year but
there is speculation it may be extended.

"The Philippines is not in the spotlight because it is already
under IMF help, the most we can see is a delay in the exit,"
I.D.E.A's Ong said.