Third Review of Thai Economic Program: IMF Executive Board Releases Further Funds to Support Thailand's Economic Program

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Page 193

"There was recognition," Camdessus said, "of the considerable achievements made so far under the economic program, which has helped to rebuild the confidence of financial markets in Thailand's economy. Despite difficult regional conditions, the balance of payments outlook has improved markedly, international reserves have been substantially replenished, and the exchange rate has strengthened significantly since the start of the year.

"Even so, the performance of the real economy is proving weaker than anticipated, and this necessitates a rebalancing of macroeconomic policy. The fiscal deficit for 1997/98 will be widened from 2 to 3 percent of GDP to allow for the effect of the recession on tax revenues and help strengthen the social safety net; monetary policy will continue to center around the goal of broad stability of the effective exchange rate; and the process of restructuring the financial sector will be intensified. The authorities are encouraged to complement these critical measures with forceful implementation of supportive structural reforms. These include amendments to the bankruptcy law and to foreclosure procedures...