Thai government commitment 'key to economic recovery'

Thai government commitment 'key to economic recovery'

BANGKOK (AFP): International Monetary Fund chief Michel
Camdessus said after meeting Thai Premier Chuan Leekpai yesterday
that the new government's clear commitment to the IMF rescue plan
was the key to economic recovery.

The country's collapsing economy will see renewed growth in
the second half of next year, after restructuring financial and
industrial sectors, if the new administration sticks to the
program, Camdessus said.

Gross domestic product (GDP) growth, which has fallen to near
zero from more than eight percent in the decade to 1995, should
eventually recover to around 6.0-7.0 percent, he said.

Camdessus said the new premier told him the IMF program is
right for Thailand, and added that he appreciated Chuan's "clear
commitment to the IMF program."

Chuan and his economic team did not seek any revisions of the
tough fiscal targets and financial reform measures required under
the US$17.2 billion rescue deal, nor did they seek more funds,
Camdessus said.

Thailand does not need "a few more millions or billions of
dollars but rather requires faster implantation of the IMF
program, to the letter," the IMF managing director said.

Aides to Chuan said earlier some adjustment may be sought in
targets negotiated by the previous government in August as a deep
recession and a credit crunch have since tightened their grip on
the troubled economy.

But the purpose of this visit was to reassure the IMF that the
new government would follow through on the agreement, not to
renegotiate the deal, they said.

Camdessus said the IMF was not dictating terms to the
government, either with regard to fiscal targets or other
aspects, and that the agency's priority was to de-politicize the
Thai aid effort.

The previous government under Chavalit Yongchaiyudh fell after
terrorizing markets by backtracking on key economic measures
designed to meet the targets on several occasions.

Tarrin Nimmanhaeminda, expected to be confirmed as finance
minister in the new cabinet, said the new government and the IMF
agreed in the meeting on the need to speed up implementation of
the recovery plan.

The latest Letter of Intent signed between the two parties was
basically aimed at strengthening the finance sector and foreign
reserves, he said.

Thai authorities have said they will come up with a
restructuring plan for the finance sector, where 58 firms
struggling under a mountain of bad debt have been suspended.

The IMF and the government were working on new measures to
deal with companies whose rehabilitation plans are rejected by
the Financial Restructuring Agency, Tarrin said. He did not
elaborate.

Camdessus said poor financial supervision and other weaknesses
in economic management had derailed rapid growth -- normal at
this stage of the region's development -- and called into
question the appropriateness of the term "Asian miracle."

Tarrin said Camdessus told the meeting that solving the
country's crisis of confidence was vital to an early recovery in
the economy.

Supachai Panitchpakdi, expected to be confirmed as deputy
premier and commerce minister, said the IMF-backed current
account deficit target of 3. 0-3.5 percent of GDP -- down from
above 8 percent in recent years -- will help restore confidence.