Henry,
may be the first step to IMF reform is to get rid of this day dreamer.
Ramsey
Thursday September 24 1998
Asian storm passes as
nations rebuild, says
IMF chief
SHEEL KOHLI in London
International Monetary Fund managing director
Michel Camdessus has proclaimed the worst of the
economic crisis in Asia is over and that signs of
recovery in countries at the centre of the turmoil
are beginning to emerge.
He said yesterday that even Japan, which had
faced a year of "catastrophe" this year, would see
an upturn in the second half of next year.
In an upbeat message delivered in an interview on
French radio in Paris, he said the strict IMF
reform programmes implemented in Thailand, South
Korea, Indonesia and Malaysia had begun to show
signs of progress.
"I think the worst is past. We can only deal with
the problems of employment with sound financial
grounding, and in those countries where the
financial basics - balance of payments, inflation . .
. foreign exchange reserves - are established.
"I am confident in the growth in those countries
and I think that from 2000 or 2001 they will start
to grow again on grounds more healthy and more
lasting than in the past."
He also believed Japan would eventually take
permanent steps to reform its crippled banking
system, despite the collapse of the latest deal
after opposition and government politicians failed
to agree on how best to bail out the sector.
"We think at the International Monetary Fund that
while this year will be catastrophic - a year of
economic contraction of 2.5 per cent - next year,
in the second half of the year, should be the start
of the recovery."
His comments come days ahead of the IMF's
release of its World Economic Outlook report,
which will make key forecasts for growth in
leading economies.
Yesterday, Mr Camdessus predicted that world
growth this year would slow to 2 per cent and that
next year's growth would only be slightly higher.
"For 1998, we think [growth] will be around 2 per
cent. We think it could be a very little bit better.
"Europe should grow maybe a little slower than this
year but let us say between 2 and 3 per cent."
He said the rest of the world was now relying on
Europe and the US to be the engine for growth in
the global economy.
"We are in a world in which the two largest
economic powers, the United States and Europe,
are doing well, while the rest of the world is doing
badly, so [it is important] Europe and the United
States manage their affairs well," he said.
"It is good that the Europeans try to make their
interest rates converge as low as possible, that is
at the levels currently in France and Germany, I
think they must continue their efforts to introduce
more flexibility into their economies, because that
is the way for these economies to grow faster."
Earlier this week, the European Central Bank
president, Wim Duisenberg, predicted that
European interest rates would converge at core
country rates of about 3.3 per cent in the
remaining days before the introduction of the
European single currency.
Mr Camdessus also pledged to help Russia, but only
on the condition that Moscow came forward with a
credible reform package.
"On the day that [Russian Prime Minister] Mr
[Yevgeny] Primakov comes to us and says 'this is
what I want to do', if the plan is credible, we will
support it.
"We have created the foundations of a market
economy and the country knows it can live without
inflation, and it was on the verge of an economic
rebound."
The IMF wants broadly to see a re-establishment
of the rouble, a re-enactment of the budget on
credible foundations and Russia dealing with
creditors in a "civilised" way.
"That is not by imposing confiscatory solutions but
rather negotiating a debt rescheduling. If they do
all that, we will certainly be ready to help them." |
