Thai bank to seek IMF help

Thai bank to seek IMF help

BANGKOK (AFP): Bank of Thailand governor Chaiyawat Wibulswasdi vowed just hours after being appointed yesterday to seek IMF assistance to restore confidence in the troubled economy.

Chaiyawat said the Bank of Thailand (BoT) would hold further talks with an International Monetary Fund (IMF) team, which arrived here Monday, on a package to revive the economy.

"IMF approval of economic plans -- whether they be from the BoT or drawn up with IMF support, will help restore confidence in Thailand's economy," Chaiwat said.

Former governor Rerngchai Marakanond said in a statement he had resigned to escape intolerable political pressure as he pushed for vital monetary and fiscal discipline.

Asked how the central bank would cope with political interference, Chaiyawat said it would maintain independence but cooperate with other government agencies in managing the economy.

"The public also should maintain confidence in the economy because it will also help ease pressure" on the baht, he said.

The currency closed stronger at 30.90-31.20 to the dollar in domestic trade from 31.80-32.00 the previous day, but it has depreciated 20 percent from its level prior to the July 2 float of the currency.

Chaiyawat said the central bank would monitor the baht, interest rates and inflation, and work to stabilize the economy.

If the baht stabilized and capital flight was averted with a confidence boost from a multi-billion dollar IMF credit line, analysts say corporate Thailand can be released from the stranglehold of high interest rates.

Big commercial banks raised the prime rate for their best customers to 13.75 percent last week, and rising defaults are adding to bad loans in bank and finance firms estimated at one trillion baht (US$33 billion).

"The central bank will continue to improve the situation in the financial sector, especially the 16 ailing finance companies," Chaiwat added.

Operations at the 16 firms were suspended last month but they resumed limited business Monday under orders to submit detailed plans for mergers or takeovers with stronger local firms or foreign partners in two months.