IMF Success In S. Korea, Thailand
Thailand and South Kor-ea provide "excellent examples" of how the International Monetary Fund can play a vital role in restoring a country's economic stability, a US envoy said yesterday.
"Both governments have achieved a stability of their currencies, a rebuilding of their reserve positions," said United States Assistant Secretary of State for Economic and Business Affairs Alan Larson.
The IMF signed a $17.2 billion bailout package with Thailand in August last year and another $43 billion bailout for South Korea shortly thereafter.
Mr. Larson said that the IMF's global performance should not be judged by the Russian example.
Members of Congress have criticized the IMF for wasting the substantial contributions it has already received from the international community. "The IMF may be an imperfect institution but it's the best institution we have at the present time for dealing with the types of challenges that we confront," said Larson.
South Korea's president predicted Monday that his country's contracting economy will resume growth in the latter part of next year. Kim Dae Jung said tax cuts and other pump-priming measures will help resuscitate the domestic economy.
"In a word, there will be no second financial crisis," Mr. Kim said. "If we continue reform measures as we do now, the economy will pick up later next year."
Citing shrinking domestic consumption and exports - the engine of the country's economy - some analysts have warned that South Korea may be headed for a new financial crisis.
But Kim said the government, backed by a record foreign currency reserve of $44 billion, will be able to repay $9 billion in external debt due this year and $36 billion due next year.
So far, the government has shut down five troubled commercial banks and 16 finance companies and ordered seven banks to improve their structure or face closure or merger.