Japan is ready to provide up to $4 billion in untied loans to Thailand through the Export-Import Bank to help the country climb out of its economic crisis, Finance Ministry Hiroshi Mitsuzuka said Aug. 11.
Mitsuzuka said he conveyed Tokyo’s intention to Thai Finance Minister Thanong Bidaya. He and his Thai counterpart met during the noon intermission of an International Monetary Fund-led meeting of Japan and other donors to work out details for an economic rescue plan for Thailand.
The total amount of funding to be promised by Thailand’s creditors at the conference is expected to be between $15 billion and $20 billion, according to informed sources.
Thailand asked the IMF for an emergency credit line of between $12 billion and $15 billion.
Tokyo expressed willingness to be the largest donor in any international aid effort to help revive Thailand’s economy due to its enormous investments in the country.
Financial authorities from 13 countries and regions, including the United States, as well as the Asian Development Bank and the World Bank met at a Tokyo hotel.
Other participants were from Thailand, Australia, Canada, China, France, Germany, Hong Kong, Indonesia, South Korea, Malaysia, Singapore and Britain.
It would be the largest international rescue effort since the package provided to Mexico after its currency crisis in 1994. Those loans were authorized to reach 50 billion yen, but Mexico did not use all the money and many of the loans have already been repaid.
Thailand last week unveiled an emergency set of economic policies that included the closure of dozens of troubled financial companies and a hike in its value-added tax in an effort to win financial support from the IMF.
Thailand’s economy had been losing steam as its exports gradually began to lose their international competitiveness and its financial sector was hard-hit by the souring of the nation’s property market.
In early July, Thai authorities decided to place its battered currency under a managed float system in response to speculative attacks, a move that triggered a wave of foreign exchange instability throughout Southeast Asia.
The eight-member Thai delegation sent to the hastily arranged meeting is led by Finance Minister Thanong Bidaya. Japan is represented by Eisuke Sakakibara, the vice minister of finance for international affairs.
As a huge investor in Thailand and other Southeast Asian countries, Japan has a strong interest in making sure that Thailand’s currency crisis and other financial troubles do not worsen or spread to other countries.
Meanwhile, the Thai government has come under fire at home over its financial woes.
Thanong is Thailand’s fifth finance minister in two years. He took office in June after Amnuay Viravan, who had been appointed to head a “dream team” of technocrats in reviving the economy, was forced to resign when political infighting stymied his reform efforts.
The Bank of Thailand has already injected some 450 billion baht ($14.5 billion) into the country’s troubled finance sector and is facing criticism for not making sure the money was being used properly. (Staff, wire reports)