Thailand gets IMF advice, studying credit line

Thailand gets IMF advice, studying credit line

BANGKOK (Reuter): Thai Finance Minister Thanong Bidaya said
yesterday he was meeting five officials of the International
Monetary Fund (IMF) this week in Bangkok to seek advice on ways
to revive the country's battered economy.

Thailand would also study if a standby IMF credit line was
necessary to help overcome the country's worst financial crisis
in more than a decade.

"We have been in consultation with the IMF for the past
month...we should be able to wrap it up (the meeting with the IMF
team) within one week," Thanong told reporters.

"The question of whether we need a standby IMF credit line
will be included in the package," he said, without saying how
much credit would be needed.

Separately, Bank of Thailand Governor Rerngchai Marakanond
told reporters that Prime Minister Chavalit Yongchaiyudh and
Thanong had agreed in principle since July 22 to tap loans from
the IMF.

"No specific figures had been agreed. We (Thailand and IMF)
only discussed it in broad principle," Rerngchai told reporters
in the first statement from the authorities signaling that
Thailand had decided privately to accept IMF loans.

Any loan taken from the IMF would be used to assist the whole
economy and not to bail out any specific sector, Rerngchai said.

Analysts have estimated that Thailand would need about $10-20
billion to help it overcome its financial problems.

A much-awaited economic rehabilitation package, drawn up by
Thanong, is being vetted by ministers and needs to go the cabinet
for approval by August 5, he said.

Thanong said his package would include fiscal and monetary
measures as well as deal with the question of what should be an
appropriate level for the embattled baht.

"The package will involve finding systematic measures to shore
up the economy," Thanong added.

"At this time, we need to set the priorities on how to tackle
problems and set our targets. Once confidence of investors is
restored funds will flow back automatically (to Thailand)," he
said.

The nation's economic woes have prompted economists and
analysts to urge the government to seek IMF financial assistance
to regain lost investor confidence. Thailand had initially
rejected the idea.

High interest rates have choked domestic business activity and
doubts over Thailand's economic soundness have prompted foreign
banks to slow their lending to Thai companies.

"We fully appreciate the frustration faced by businessmen
because of the drying up of foreign loans and liquidity. They
have our sympathy," Thanong said.

"The current liquidity problem can be compared to a leaking
barrel. No matter how much we fill it in, it keeps leaking out.
But if we plug the holes, it can stop the leak and liquidity can
be refilled easily," he said.

Thanong said recent financial measures such as allowing the
managed float of the baht on July 2 and policies to allow foreign
investors to take more than a 25 percent stake in Thai financial
institutions had been implemented in consultation with the IMF.

"The IMF has a job to help and advice on how to resolve these
(Thai) problems systematically...we need their expertise and we
want the correct approach extended by the international
community," he said.

"We must frankly admit we need expertise and experience in
salvaging our problems," he added.