Malaysia has no need to seek IMF bailout: Analysts

Malaysia has no need to seek IMF bailout: Analysts

KUALA LUMPUR (AFP): Malaysia has no need to seek assistance
from the International Monetary Fund (IMF) as its exchange
reserves and short-term debts are still at manageable levels,
analysts said yesterday.

But the country may have to seek soft loans from individual
countries to ease problems arising from its ailing currency and
fears that corporations may not be able to meet their foreign
debt obligations, they said.

Simon Flint, regional economist at Singapore-based research
house IDEA, said Malaysia was "not even significantly closer" to
seeking IMF help.

"I must stress that all those countries under IMF tutelage
have a serious balance of payments imbalance ... Malaysia
doesn't," Flint told AFX-Asia, a financial news wire affiliated
to AFP.

Although the Bank for International Settlements (BIS) recently
revealed that Malaysia has a surprisingly large amount of short-
term debt, the country has sufficient reserves to cover it, he
said.

In a recent report on national debt levels, the BIS said
foreign bank loans to Malaysia rose 43 percent year-on-year to
28.8 billion dollars as of June last year.

Flint said the IMF stance was to address the overall balance
of payments side but "Malaysia is in need of liquidity to help
the export and export supporting industries."

Sani Hamid, emerging markets analyst at MMS International in
Singapore, agreed that Malaysia was unlikely to seek an IMF
bailout.

There was not "that big a foreign debt, unlike Indonesia,
Thailand and Korea who have large debts maturing and creditors
not rolling over (the loans)," Sani said.

"That there will be corporate failures is a certainty; the
question now is -- how many will go under," he added.

Indonesia, Thailand and South Korea have all received multi-
billion-dollar IMF-led bailouts in recent months to overcome a
severe financial crunch.

One senior economist at a local brokerage who declined to be
named said Malaysia was unlikely to need IMF assistance to bail
out local companies.

"I don't think that our problems will be solved even if we go
to the IMF for help. An IMF package would drive the economy into
a recession... corporate earnings will also come down
drastically," he said.

"Maybe by going to IMF, we will be able to restore some
confidence but I think it will only be a temporary thing," he
said, adding that the ringgit's slide to below four to a dollar
should not cause any alarm as other regional currencies have also
simultaneously weakened.

He said Malaysia's government external debt at the end of
September was 10. 9 billion ringgit (US$2.5 billion), with the
total for the year estimated at 11 billion to 12 billion ringgit.

A Singapore-based economist said Malaysia's foreign currency
debt comprised a small percentage of its gross domestic product
while its external debt problem dwarfed in comparison to
countries that have sought IMF help.

But he said Malaysia faces a huge domestic debt burden as a
result of excessive lending. "Although Bank Negara has taken
steps to curb lending, loans growth is not slowing down fast
enough," he warned.

Multinational corporations such as Tenaga Nasional Bhd. and
Telekom Malaysia Bhd. may face difficulties in servicing their
Eurobond obligations but the problem was not widespread, the
economist said.

On the other hand, the federal government has a cleaner bill
of health, having pre-paid external debt over the past couple of
years.