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.