• 
• 

Published on August 11, 2007

"The [Thai] government had no choice [but to reform]," he said.

Ammar Siamwalla, acting president of the Thailand Development Research Institute, had earlier called some of the International Monetary Fund's demands the "kiss of death".

He and other financial experts were featured panellists at the seminar on the "Asian Financial Outlook: The Next 10 Years", organised by the Thai Institute of Directors, The Nation and Asia News Network.

They said that although the financial crisis was unlikely to repeat itself, the country still faced challenges in reaching good governance, well-planned and sustainable investment as well as prudent monetary and fiscal management.

"In my view, governments have learned the main lessons of the experience 10 years ago, and another Asian crisis is, therefore, unlikely to happen," Neiss said. "Countries are less vulnerable to a capital-account crisis because they are keeping exchange rates flexible, they have accumulated substantial forex reserves, their external position is strong and they pursue stabilising macroeconomic policies."

Neiss recalled that the recommended measures were a normal part of an IMF recovery package, but there was a second reason. Without tackling these necessary reforms, the government would not regain the confidence needed to calm the market and get international financial support.

"So there was no choice. Although I agree that there were complications in the programme that made the task of the government more difficult, at that time there was no other choice. Otherwise, no country wo uld have lent to support the programme.

"In retrospect, I think these reforms turned out to be right," he said. "The lesson, and maybe the most important one, from the pre-crisis experience is to take early and substantive preventive action. I cannot help thinking that the course of history could have been different, if before mid-97 there had been devaluation, steps to shore up ailing financial institutions, some macroeconomic tightening and a large international rescue package."

Tarrin Nimmanahaeminda, the finance minister who had to dispense the IMF's medicine, said he agreed that the crisis could have been averted, if steps had been taken to deal with it beforehand.

"We should have run a fiscal deficit to revive the economy, instead of keeping to the requirement to run a surplus. The interest rate should also have been lower. But it's important to recognise the timing, in which we spent two or three months to negotiate a relaxed conditionality with the IMF," he said.

He said Thailand could learn from the crisis. "Now it's important to recognise that the economy is at a crossroads. We have pretty much depleted natural resources and the switch to an efficient and sustainable sector has yet to be completed." Infrastructure reform must be implemented, he said.

Vichit Surapongchai, Siam Commercial Bank executive chairman, said asset diversification would give banks immunity against any repetition of 1997.

Business Reporters

The Nation