News Brief No. 99/16

News Brief: IMF Completes Review and Approves Credit Disbursement for Thailand

April 7, 1999

Michel Camdessus, Managing Director of the International Monetary Fund (IMF), made the following statement: "I am pleased to announce that the Executive Board of the IMF, in support of the Thai government’s economic program, today approved the completion of the sixth review under the stand-by arrangement. As a result, Thailand may now borrow an additional US$500 million from bilateral and multilateral sources, of which the IMF will contribute SDR 100 million (about US$135 million). With the release of these funds, Thailand will have received US$13.3 billion, or more than three quarters of the total financing package of US$17.2 billion approved in August 1997."

"In recent months, good policy implementation under the program has further consolidated financial stability, creating conditions for a recovery in the second half of this year. The exchange rate has remained stable, interest rates have declined further, and the external position continues to strengthen. As a result, inflation has been low, and the decline in output has been arrested. However broad economic recovery has been delayed due to continued weakness in domestic demand and the difficult external environment," Mr. Camdessus stated.

He welcomed recent efforts by the Thai authorities to revive demand and advance the process of structural reforms. In particular, he said that the new fiscal stimulus package unveiled by the Thai government last week would provide "a much needed boost to domestic demand, whilepreserving a sustainable fiscal position over the medium term". Mr. Camdessus also encouraged the government in their continued efforts to strengthen the financial system. "Despite difficult conditions, there has been good progress on bank recapitalization, and private banks have either successfully raised capital or are in the process of doing so. The privatization of banks taken over by the government is also expected to be completed within the next six months. Together with the recent reform of bankruptcy laws, this should accelerate corporate and financial sector restructuring, and facilitate economic revival," Mr. Camdessus said.