IMF chief vows to 'listen better'
Fund plans more of an advisory role
Parista Yuthamanop, 
Bangkok Post, June 2, 2000

The International Monetary Fund will seek to strengthen its role as an advisory body co-operating with member states in dealing with economic problems, its new managing director said yesterday. Horst Kohler said the fund would change from "lecturing or imposing" conditions on crisis-hit countries to one that relied on greater consensus-building with authorities in drafting reform packages. 

"So at the end, there is really true ownership of measures that are to be taken in order to get back to strong growth," Mr Kohler said. 

"One of the lessons of the Asian crisis is that we should listen better to the people."Mr Kohler, a former president of the European Bank for Reconstruction and Development, succeeded Michel Camdessus in the IMF post last month. He arrived in Bangkok on Wednesday as the first stop of a five-nation Asian tour. Mr Kohler met Prime Minister Chuan Leekpai yesterday morning before leaving for Beijing. 

The IMF, which has been sharply criticised for its insistence on tight fiscal policies early in the Asian crisis, is now evaluating proposals for reform. One of the key lessons it had learned was the need to pay greater attention to crisis prevention, Mr Kohler said. He praised the Thai economy as firmly on the path for recovery, although he noted that challenges remained to help reduce non-performing loans in the financial system. 

"Though there is more work to be done regarding the banking sector... Overall, the situation is positive."Mr Kohler expressed strong support for a plan announced last month at the Asian Development Bank annual meeting in Chiang Mai to strengthen regional surveillance and financial co-operation. The "Chiang Mai Initiative" would include Asean, China, Japan and Korea.  

Earlier attempts to build a Japan-led Asian Monetary Fund had been resisted by the United States out of fear that it would bypass the IMF's insistence on reform for countries seeking help. But Mr Kohler said the Asian scheme would play a complementary role to the IMF in helping head off crises, although he noted that details of the plan remained to be worked out. 

"Regional initiatives can be very helpful in supporting sustained economic growth and stable financial relations among participating countries, which are precisely the goals that the IMF is tasked to promote," he said. 

"The IMF looks forward to being a partner in developing further these regional crisis prevention and resolution mechanisms. "Mr Chuan agreed the IMF should use its expertise to help advise countries on how to avoid crisis situations.

Finance Minister Tarrin Nimmanahaeminda said discussions covered a broad range of topics, including efforts by the IMF to clarify its role in relation to that of the World Bank.  Mr Kohler agreed with the prime minister's view that IMF advice should be individually tailored for each country's situation, rather than based on any single economic theory or prescription, said Kleo-Thong Hetrakul, an IMF executive director and Thailand's representative to the Fund. 

Thailand entered a $17.2-billion standby credit programme with the IMF in August 1997, after nearly exhausting its foreign reserves in an effort to prop up the value of the baht. The country is scheduled to exit the IMF economic programme this month. IMF staff are scheduled to arrive next week for a final review of the country's economic policies.

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