News Brief: IMF’s Sugisaki Welcomes Thailand’s Financial Measures
August 14, 1998
IMF’s Sugisaki Welcomes Thailand’s Financial Measures
Shigemitsu Sugisaki, Acting Managing Director of the International Monetary Fund (IMF), said: "The actions announced today by Minister Tarrin and Governor Chatu Mongol aim at decisively restructuring Thailand’s financial system and facilitating economic recovery. The announcement recognizes that the recession and the regional economic environment warrant forceful and comprehensive measures.
"The authorities are seeking to address all the main areas of weaknesses in the financial system. Today’s announcement was preceded by forceful action involving intervention by the Bank of Thailand (BOT) in additional banks and finance companies. Resolution strategies for these as well as previously intervened institutions have been announced, involving the exit, merger, or sale of the unviable institutions. The hallmark of the announcement is the availability of public funds to catalyze the entry of new private capital, as well as strong incentives for banks to restructure corporate debt. A number of burden-sharing safeguards have been developed, including the write-down of the value of the assets of existing shareholders. Other aspects of the announcement encourage the adoption of international best practice prudential standards, commit the authorities to the operational restructuring of state banks to prepare them for privatization, and arrange for efficient recovery mechanisms for nonperforming assets.
"Today’s announcement demonstrates the resolve of Thailand’s authorities to pursue economic restructuring in the face of very difficult domestic and regional conditions, ensure the solvency and credibility of the core banking system, and strengthen the basis for the recovery of the economy. The measures constitute the core of ongoing discussions toward completion of the fourth review of the stand-by credit," Sugisaki said.