Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

IMF, Japan Loan Thais $16 Billion

TOKYO -- The international community came to the rescue of financially strapped Thailand on Monday, pledging a total of $16 billion in loans from the International Monetary Fund and Asian nations led by Japan.


The offer is the largest loan package to a single country since the IMF and donors led by the United States made nearly $40 billion available to Mexico in 1995.


Thailand -- long one of Southeast Asia's booming "tiger economies" -- had been looking for $12 billion to $15 billion to plug financial holes created when it floated its baht currency last month after failing to defend the currency from speculative attacks.


IMF deputy managing director Shigemitsu Sugisaki told a news conference that the IMF had estimated that Thailand needed funds in the order of $14 billion for 1997 and 1998 and that participants had supported the request. "The meeting proceeded very smoothly and positively. Some $16 billion in financial support was promised, including the proposed IMF contribution of $4 billion," Sugisaki said.


He said Thai reform measures would send a strong signal to financial markets.


"The measures they have taken and are going to take will send a good, strong signal to the market and the [IMF] management is going to propose a strong package to the highest board for its consideration," Sugisaki said.


He also said Malaysia and other Asian countries had taken steps to make sure there was no spillover effect from Thailand's problems.


Thai Finance Minister Thanong Bidaya told the news conference that the package would basically be used to shore up Bangkok's foreign reserves.


Japan, which hosted the meeting, pledged to match the $4 billion to be provided by the IMF.


Analysts said that while Japan wanted the IMF to take the formal lead in forging the package, Tokyo had no alternative but to accept a big part of the burden to ease Bangkok's credit crunch and prevent a chain reaction in the region.


"This very credible economic adjustment package and financing package for Thailand should restore calm to financial markets in this region and restore calmness to the currencies of this region," said Joseph Yam, the Hong Kong Monetary Authority chief executive.


The United States did not pledge individual aid, but will support the package through the IMF, the IMF's Sugisaki said.