To all:
More developments. I think we can say that this is not at all surprising:
To Seek IMF-Package Revisions
By PAUL M. SHERER
Staff Reporter of THE WALL STREET JOURNAL
BANGKOK, Thailand -- Thailand's Finance Minister
will travel to Washington this month in a bid to negotiate
revisions to an International Monetary Fund rescue
package, amid growing complaints by senior Thai
officials that the U.S. has failed to help a trusty ally in its
time of need.
Although the U.S. is the largest single contributor to the
IMF, it didn't directly contribute any funds to the $17.2
billion in emergency loans for Thailand arranged by the
organization in August. As the Asian crisis deepened, the
U.S. lent billions to Indonesia and South Korea.
Many Thais feel baffled and betrayed by the perceived
U.S. failure to help Thailand. Since becoming the first
country in Asia to establish diplomatic relations with the
U.S. in 1833, Thailand has been one of the region's
closest U.S. partners. The current Treaty of Amity
allows U.S. companies to operate in Thailand in many
areas of business barred to other foreign firms, and the
U.S. operates its second-largest embassy here.
Potential Losses for U.S.
Potential casualties of any souring in Thai-U.S. relations
include the preferential status U.S. firms enjoy here,
along with Thailand's continued cooperation with the
U.S. over trade agreements. U.S. companies have $16
billion invested in Thailand, and two-way trade between
the countries totaled $18.5 billion in 1996. In recent
years, and under strong U.S. pressure, Thailand has
opened its skies to more flights by Federal Express
Corp. and UAL Corp.'s United Airlines, set up laws and
courts to protect intellectual property, and extradited
alleged Thai drug traffickers to stand trial in the U.S.
"At the moment, the U.S. has done nothing to help
Thailand, to be very direct," chief government
spokesman Akapol Sorasuchart said in an interview
Monday. He said the U.S. effort put into helping
Thailand "cannot be compared" with U.S. help for
Indonesia and South Korea.
He declined to say what the consequences might be to
bilateral relations, but did say that "we want a clearer
signal sent from the U.S. that they still believe in Thailand
and they still believe Thailand is a valuable trading
partner. If they think the U.S. still has a future here, [the
U.S. could help with] the short-term debts that need to
be rolled over, or the benefits of a stronger U.S. dollar
should be directed to Thailand one way or another."
Deputy Finance Minister Pisit Leeahtam suggested that
the U.S. also could lend additional funds to Thailand if
the existing IMF program runs short. Many economists
have questioned whether the $17.2 billion in the
IMF-led rescue will be enough as the region's economic
troubles deepen.
No Blame?
"It is not our position to blame the U.S. for not joining"
the rescue, Mr. Pisit said in an interview. But, he added,
"we hope the U.S. will play a more active role in the
future." As for the idea of lending additional funds, he
said, "I'm not saying that we are asking for more funding;
I'm not saying the funding is insufficient. It depends on
the review of the program. [But] if they think the U.S.
could join in whatever manner, I think that would be
useful."
After the Clinton administration ran into strong domestic
political opposition over providing funds to the 1995
Mexico bailout, U.S. officials felt they were politically
unable to provide funds directly to Thailand, though U.S.
officials played a major role in designing Thailand's IMF
program. But once Thailand's troubles spread to
Indonesia and Korea, Washington felt it had no choice
but to provide direct aid to those countries.
Whatever the reasons for Washington's moves, many
ordinary Thais, too, have begun looking askance at the
U.S. While Americans take comfort from the roaring
U.S. economy and another strong year on Wall Street,
many Thais are asking whether globalization is benefiting
Americans at the expense of Asians. "If the U.S.
continues to enjoy fast-rising living standards and
incomes, watching its firms spread and grow across the
globe while citizens from other nations slide from modest
prosperity to poverty and disaster, then the whole
globalization project will become politically, socially,
morally and economically untenable," said the Bangkok
Post, an English-language daily, in a weekend editorial.
Sticking With the Plan
Thai officials say they are sticking with the IMF plan and
said Finance Minister Tarrin Nimmanahaeminda isn't
going to Washington for a major renegotiation, but
added that revisions are likely. Thailand is finding it
difficult to meet the IMF condition that the country
achieve a budget surplus equal to 1% of its gross
domestic product in the fiscal year ending Sept. 30. The
country already has slashed its planned budget for the
year to 800 billion baht ($16.63 billion) from 982 billion
baht, but government revenues have fallen far faster than
expectations as the economy plunges into recession.
"It's a quarterly review, rather than going there
specifically to renegotiate," Mr. Akapol said. Since the
IMF program's first review, which began in October,
"the Korean situation has turned for the worse, and the
same for Indonesia, which has an effect on Thailand," the
government spokesman added. Thailand's economy has
also slowed far more than expected earlier. Also, tight
liquidity and a sharply slowing economy "affects the
income of the government, so that in turn will affect the
1% surplus condition. Nothing has been put forward at
the moment, but we believe that when we review the
overall situation with the IMF, certain figures will
probably need to be altered. But we're not calling for
renegotiation of the earlier agreements," Mr. Akapol
said.
Nor will Mr. Tarrin follow the lead of South Korean
officials and meet with bankers in the U.S. to ask for a
debt rollover, Mr. Pisit said. "Most of our debt is
private-sector debt, and therefore the role for officials to
negotiate is not that much," Mr. Pisit said. "We are ready
to provide any assistance, but we will not negotiate with
private banks directly."
During the finance minister's trip to IMF headquarters in
Washington, Mr. Tarrin is likely to meet with U.S.
officials, though Thai officials said his agenda hasn't been
set yet.
Some Good News
In recent weeks, the Thai government has taken strong
action on the financial sector, forcing all but two of the
56 finance companies whose operations it suspended
last year to close permanently. The country has opened
its 15 commercial banks to majority foreign ownership,
and several major foreign investments in the banks are
under way, including a possible takeover of First
Bangkok City Bank PCL by Citicorp's Citibank of the
U.S.
There has even been a rare bit of good economic news.
For several years, economists had said one of the
greatest threats to Thailand was its current-account
deficit, a broad measure of trade in goods and services.
Last week, the Bank of Thailand announced that in
September, for the first time in 11 years, the country
actually recorded a current-account surplus.
Still, the baht keeps on dropping in line with other Asian
currencies. On Monday, it fell below 50 baht to the U.S.
dollar for the first time. It now takes twice as many baht
as it did in June to buy one dollar -- or one overseas
college education, or a barrel of oil, or many imported
goods. More crucially, it takes twice as many baht to
repay the foreign loans. And on Monday, yet another
prominent Thai company, property developer Property
Perfect PCL, said it will miss payments on its debts.
The continued plunge in Asian currencies has left some
analysts to question whether the IMF programs are
doing more harm than good. Mr. Pisit, however,
brushed aside talk that the IMF is applying a dated
formula that was developed in response to the Latin
American debt crisis in the 1980s. Some critics have
said that by forcing anti-inflationary policies, a curbed
money supply and slashed government spending, the
IMF is deepening the crisis by forcing Asia's troubled
economies deeper into recession.
"I think the IMF is quite flexible, and is quite receptive to
new ideas and changing environments," Mr. Pisit said.
He said deep budget cuts could indeed deepen a
recession. "If they can find a better medicine, we will
switch to another type of medicine. But with an
overheated economy, with a huge deficit in the current
account, and piles of debt outstanding, I think this is
medicine one should certainly take." |
