Malaysia may turn to IMF, says Mahathir Mohamad

Malaysia may turn to IMF, says Mahathir Mohamad

KUALA LUMPUR (AP): Malaysia may have to turn to the
International Monetary Fund if government policies fail to steer
the economy to recovery, Prime Minister Mahathir Mohamad said
yesterday.

"Until now we did not need IMF help because we have taken some
measures to help the economy," said Mahathir, one of Asia's most
vocal critics of IMF policies.

"However, if we still cannot solve the economic problems,
maybe one day we will have to bow to the IMF," Mahathir said in a
speech.

He said he had recently consulted the IMF on resolving
problems facing debt-laden Malaysian companies.

But Mahathir still maintained that the IMF prescription was
ill-suited to Asian nations.

IMF's approach to revive the economy included wage cuts,
trimming work forces, closing down troubled companies as well as
government departments that the multilateral agency deemed
useless, he said.

He pointed out that Indonesia had 24 million jobless, a number
which was more than Malaysia's population.

"For them, the suffering of the employees is unimportant. It
is only important for them to revive the economy through reduced
spending."

But he also indicated that Malaysia may have to cut salaries
of government employees if the economy worsens. Last year,
bureaucrats took a 10 percent pay cut when the government
announced its first austerity package.

Mahathir has repeatedly blamed the IMF for pushing Indonesia
into the violent crisis that culminated in President Soeharto's
ouster.

A recent policy turnaround has taken Malaysia away from the
IMF road to recovery. The government this week announced a hike
in spending and introduced measures to encourage banks to ease
lending to ailing companies.

Mahathir has also railed against high interest rates that
Malaysia, heeding IMF-advocated policy, had imposed to quell
inflationary trends and prevent capital flight that could shatter
it already depreciated currency.

High interest rates would kill business, Mahathir said in
Friday's speech to government employees.

Malaysia's economy contracted by 1.8 percent in the first
three months of 1998, compared to a 6.9 percent growth in the
previous quarter. Independent analysts have dismissed the
government's optimism on recovery, predicting a recession.