01 August 2003
Two years ahead of schedule, Thailand has repaid the final installment on a $13 billion loan from the International Monetary Fund and other creditors. The repayment marks Thailand's emergence from six years of recession.
In an address to the nation on Thursday, Prime Minister Thaksin Shinawatra announced a final payment of $1.4 billion to the International Monetary Fund.
Mr. Thaksin congratulated the people of Thailand, promising that this would be the last time the country owed money for an IMF bailout.
He said that Thailand has ample foreign currency reserves, and the government is confident about the economy's future. He predicted that GDP growth for this year would reach more than 5.5 percent.
Financial analysts say the early repayment will be a psychological boost rather than a direct help to the economy. Steven Barnett, the IMF representative in Thailand, explained, "I think the pre-payment itself probably does not have a significant direct effect on the economy. There could be some confidence affects or psychological effects on the economy. It is definitely a welcome sign in as much as it reflects the present strengths of the macro economy."
The repayment marks Thailand's emergence from the long Asian financial crisis, which was precipitated in mid-1997 by the devaluation of the Thai currency.
The baht and other Asian currencies had come under repeated speculative attacks that year, and finally, on July 2, the Thai central bank floated the baht. Within a month, the currency was trading at 55 to the U.S. dollar, less than half its value before the crisis began.
Thailand sought the help of the IMF in August, 1997, after the country's reserves had been all but depleted by efforts to defend the currency.
The loan package, which consisted of money from the IMF and other creditors, offered Thailand a total of $14.5 billion.
Prime Minister Thaksin said Thursday that slightly less than $13 billion were actually withdrawn from the fund. The IMF portion of the loan was due in June, 2004, while final payments to the other creditors were due in just under two years' time.