Thailand not to seek easing of IMF conditions

Thailand not to seek easing of IMF conditions

BANGKOK (AFP): Premier Chuan Leekpai has vowed Bangkok would
not seek an easing of its IMF bailout conditions, despite Thai
currency and stock markets receiving another beating, a report
said yesterday.

Chuan said Thursday his government would not ask the
International Monetary Fund (IMF) to soften the terms of the
economic bailout package granted in August, the Bangkok Post
reported.

"The IMF has admitted that they misinterpreted the actual
situation affecting Thailand. Nevertheless, we do not find it
necessary to change the IMF conditions for the time being," the
paper reported Chuan as saying.

Chuan gave his assurance to parliament yesterday amid
speculation from opposition parties that the government would
seek a softening of the IMF conditions.

Analysts have said international investor confidence in
Thailand relies heavily on the country's strict adherence to
conditions attached to the IMF-led 17.2 billion dollar package.

Efforts to ease hardships by seeking a relaxation of the terms
would send the wrong signal to the international community,
denting confidence further.

Chuan's assurance came amid a fresh wave of turmoil in Asia's
currency and stock markets which sent the Thai baht to historic
lows in the first few minutes of trade this morning.

The baht dropped to 44.75-95 to the dollar in the first few
minutes of trade Friday, pulling back only slightly before
plunging further to 44.95-45. 05 by late morning after central
bank intervention.

Thai share prices dropped 1.8 percent in the morning,
recovering later to 0.3 percent below Thursday's close.

Analysts have blamed further collapses in the Thai markets on
turmoil in South Korea resulting in a drastic weakening of the
won.

Chuan and his so-called economic "dream team" vowed after he
was appointed last month to begin tackling the key problems fast
and diligently to restore confidence and boost liquidity in the
financial sector.

He and his team have vowed they would adhere to the stringent
targets and conditions of the rescue, despite the fact that the
program will bring a period of biting austerity for Thailand.

Fears had been raised in the financial community that the
previous Thai government did not have the will or the ability to
fully implement the IMF conditions, which include strict
macroeconomic targets.

Under its bailout, Thailand must produce a budget surplus of
one percent of gross domestic product in 1998, keep its current
account deficit in check and move fast to restructure the
crippled financial sector.

The sector, groaning under the weight of more than $35 billion
in bad debts, was the object of a tough crackdown on Monday when
the authorities shut down all but two of 58 suspended and
technically bankrupt finance firms.

The IMF conditions have forced Bangkok to slash its fiscal
1998 budget by 162 billion baht to 800 billion baht ($17.8
billion) over the last two months in a bid to meet the budget
surplus requirement.

The move has led to a tough period of official belt tightening
and will undoubtedly mean rising unemployment.

Analysts have said however that the worsening economic
situation and a realization of the seriousness of Thailand's
problems has meant that some of the conditions will be very
difficult to meet.