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Thailand to Pay Back IMF Loan Ahead of Schedule - 2002-08-26

Five years after Thailand was forced to call for international help to pull it back from the brink of economic disaster, the government says it is ready to repay the last of the debt ahead of schedule. The early repayment comes amid positive economic figures and a steady recovery.

Five years ago it took $17 billion in assistance from the International Monetary Fund and various donor countries to keep Thailand afloat.

The emergency funds were needed to rebuild foreign exchange reserves devastated by a failed defense of the local currency, the baht. The reserves had fallen from $38 billion in January 1997, to just $800 million by June 1997.

The government says its reserves have now returned to pre-crisis levels of $38 billion. Overall external debt has dropped from $79 billion, a little over 18 months ago, to $64 billion today.

The crisis that began in Thailand in July of 1997 sent the entire region's economic growth into a downward spiral. Thailand's economy contracted by 10 percent in 1998, and while recovery has been slow, annual growth is now more than three percent.

Prime Minister Thaksin Shinawatra says the economy is strong enough to repay the IMF funds one-year ahead of schedule. He says the last installment will be handed over to the IMF by New Year's Day.

Johanna Chua, a research analyst with Salomon Smith Barney in Hong Kong, says the early repayment will make it easier for Thailand to raise funds on the international capital markets. "I think the positive implication of this is it is certainly going to improve investor confidence about Thailand's debt servicing ability," she said.

Thailand's central bank says domestic demand is on the rise, and growth in private investment is strong, providing reason for confidence in the near future.