Japan indicated August 6 that it is ready to extend the greatest amount of financial assistance in a multilateral effort to support Thailand’s flailing economy.
Finance Minister Hiroshi Mitsuzuka welcomed the comprehensive package of economic policies outlined by Bangkok on August 5 that were in line with conditions laid out by the International Monetary Fund for securing IMF credit. The measures include the closure of dozens of ailing financial companies and a raise in the value-added tax — steps Mitsuzuka said would contribute to stabilizing financial markets and securing mid- to long-term economic growth in Thailand.
Thai authorities and the IMF are still discussing details for an economic adjustment program for the Thai economy, and Mitsuzuka said that once the program is wrapped up Japan would offer financial aid through the Export-Import Bank of Japan. Thailand has asked the IMF for an emergency credit line of between $12 billion and $15 billion, but a final figure on which the two sides agree have still to be negotiated.
Media reports say Japan might lend the equivalent of the IMF loan bracket, with figures ranging from $40 billion to $50 billion. “The IMF has requested assistance from various nations and international organizations, including our country, and we would like to extend strong support to such international assistance efforts,” Mitsuzuka added.
Finance Ministry officials said that while they could not comment on how much Tokyo would offer, it would naturally be the top lender, given the close economic ties between Japan and Thailand and the entire Asian region. The scale of financial assistance would be decided after all details were hammered out between Thailand and the IMF and clear estimates of how much funding Bangkok needs were calculated, they added.
One official said that the matter was basically an Asian issue, and that the nations contacted by the IMF for financial support so far were mainly in Asia. Institutions such as the Asian Development Bank were also expected to be part of the assistance effort, sources in Tokyo said.
Private financial institutions in Japan are also expected to offer some form of assistance to Thailand, but industry sources said details have yet to be finalized. Some media reports put the figure in the billions of dollars range.
Ministry officials said they still believe in the fundamental strength of the Thai economy, but acknowledged that uncertainties surrounding the nation’s troubled financial companies have been a nagging concern.