Thailand to get $1.2b in bailout from ADB

Thailand to get $1.2b in bailout from ADB

MANILA (AFP): The Asian Development Bank (ADB) said yesterday it would provide US$1.2 billion over the next three years as part of a multilateral effort to stabilize the Thai economy.

The $1.2 billion is part of $16 billion raised Monday by the International Monetary Fund (IMF) to bailout Thailand which floundered following speculative attacks on the baht.

Mitsuo Sato, ADB president was quoted in the statement as saying he believed the "the Thai economy was fundamentally strong" and that "effective implementation of the stabilization program will help overcome current economic difficulties."

Thailand must restructure its industrial sector to maintain international competitiveness and address the social costs of the financial and economic sector reforms, Sato said.

The ADB has lent $3.82 billion to Thailand for 73 loans since 1968, the statement said.

Present at the IMF meeting aside from Thailand were Australia, Britain, Canada, China, France, Germany, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Singapore, and the United States, as well as the ADB and the World Bank.

Thailand went to the IMF for the fund's biggest assistance package since the Mexican bailout of December 1994 after spending billions of dollars on a crumbling finance sector and a failed defense of the baht.

Australia

In Sydney, officials said yesterday foreign office intervention prompted Australia to double its pledge to Thailand's crumbling economy and lend US$1 billion as part of an IMF rescue package.

Australia had proposed a contribution of $500 million but Foreign Minister Alexander Downer argued that in the interests of regional integration Canberra should match the support offered by Hong Kong, Malaysia and Singapore.

Australia is one of seven Asia-Pacific region nations to contribute.

"Through participating in this financing package, Australia will be joining other key countries in the Asia region to support Thailand and to ensure continued economic stability in the region," Treasurer Peter Costello said in a statement.

"The arrangements are important for Australia's interests and the region."

Australia's involvement will be made through a foreign currency swap arrangement between the Reserve Bank of Australia and the Bank of Thailand.

The terms and conditions have yet to be negotiated.

It is by far Australia's largest such contribution to the IMF and is 20 times its recent contribution to an IMF bailout for Papua New Guinea.

The Australian Financial Review said that if countries like Australia, Japan and the U.S. were to abandon Thailand now, they would demonstrate that their exhortations and dialogues on democratic values were mere posturing.