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Crisis, reform and recovery

The Asian financial crisis of 1997-98 shook the foundations of the global economy and what began as a localised currency crisis soon engulfed the entire Asian region. This book explores what went wrong and how did the Asian economies long considered 'miracles' respond, among other things. The combined effects of growing unemployment, rising inflation, and the absence of a meaningful social safety-net system, pushed large numbers of displaced workers and their families into poverty. Resolving Thailand's notorious non-performing loans problem will depend on the fortunes of the country's real economy, and on the success of Thai Asset Management Corporation (TAMC). Under International Monetary Fund's (IMF) oversight, the Indonesian government has also taken steps to deal with the massive debt problem. After Indonesian Debt Restructuring Agency's (INDRA) failure, the Indonesian government passed the Company Bankruptcy and Debt Restructuring and/or Rehabilitation Act to facilitate reorganization of illiquid, but financially viable companies. Economic reforms in Korea were started by Kim Dae-Jung. the partial convertibility of the Renminbi (RMB), not being heavy burdened with short-term debt liabilities, and rapid foreign trade explains China's remarkable immunity to the "Asian flu". The proposed sovereign debt restructuring mechanism (SDRM) (modeled on corporate bankruptcy law) would allow countries to seek legal protection from creditors that stand in the way of restructuring, and in exchange debtors would have to negotiate with their creditors in good faith.

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The evolving international financial architecture

financial crisis Congress approved some $18 billion in much-needed new funding for the IMF. Indeed, under the NAB, the 25 participating countries agreed to provide up to SDR 34 billion in supplementary resources to the IMF.14 The Fund has also taken steps to increase its own resources. A 45 per cent quota increase, raising the Fund’s total quotas to SDR 210 billion, took effect in January 1999. With this strong backing, the IMF has already begun to implement measures to “reform the way the International Monetary Fund does business as well as enhance its capacity to

in The Asian financial crisis
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Crisis, reform and recovery

(about 80 per cent) towards the US dollar.17 The Exchange Equalization Fund, chaired by the deputy governor of the Bank of Thailand, determined the exchange value of the baht each working day in accordance with fluctuations of major currencies. With regard to portfolio investment, in 1986 the authorities reduced tax impediments to portfolio flows, in particular, for purchasing Thai mutual funds. The acceptance of Article 8 of the International Monetary Fund (IMF) Agreement by the Bank of Thailand on May 20, 1990 served as a catalyst to further financial liberalization

in The Asian financial crisis
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Issues, debates and an overview of the crisis

, especially the powerful business interests of the oligarchs. The continuing revenue shortfalls, the high debt-service burden and the international flight to quality finally pushed the authorities to appeal for foreign assistance. Under pressure from the United States Treasury, the International Monetary Fund on July 20, 1998 approved its portion (US$11.2 billion) of a US$22.6 billion loan package to strengthen Russia’s economic program and help stabilize the ruble.12 Although US$4.8 billion was spent almost immediately to defend the ruble, this failed to bolster confidence in

in The Asian financial crisis
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Post-crisis Asia – economic recovery, September 11, 2001 and the challenges ahead

crisis abated, capital once again started to return – with FDI dominating the composition of net private flows, representing about 82 per cent of the total (World Bank 2000c, 154). This allowed the economies to rebuild their official international reserves, reduce their external liabilities, and strengthen their currencies and external current-account positions. Fifth, prudent monetary and fiscal policy – some domestically inspired and some promoted by the IMF – have acted as important catalysts for recovery. For example, in South Korea, Thailand and Malaysia, moneymarket

in The Asian financial crisis
Open Access (free)
Crisis, reform and recovery

greatest source of vulnerability, indeed, the fundamental weakness lay in Indonesia’s over-guaranteed but under-capitalized and underregulated banking sector. The precipitating factors were the contagion, but also, more importantly, poor macroeconomic management by the Suharto regime; and to a lesser extent the International Monetary Fund exacerbated the crisis. The background The fact that nobody saw Indonesia’s impending collapse is hardly surprising. Hal Hill (1999, 8) notes that before the crisis “almost every technical economic indicator looked safe.” Likewise

in The Asian financial crisis

months of lengthy campaigning, Ford would eventually lose the general election in November 1976. The year 1976–77 was, on all fronts, a difficult one for the Ford White House.5 US–UK relations were not to be an exception to this. Following a summer of economic turmoil, which included speculative pressure on the UK currency (sterling), and the refusal of international markets to lend further credit to Britain to finance its spending, James Callaghan was forced to seek a loan from the International Monetary Fund (IMF). The IMF insisted that a loan would only be provided

in A strained partnership?

adjustment programme initiated by the International Monetary Fund, which required the federal government to curtail spending on social services; 29 in 1991, states were required to purchase their own vaccines. 30 Since imported vaccines used during the EPI drive in 1990 had been provided by UNICEF and other non-governmental organisations via the federal government without charge to local governments, the availability of these vaccines drastically

in The politics of vaccination

following two decades to reach US$6916 million by 1990 (Situmbeko and Zulu, 2004 ). That the majority of this borrowing was from the International Monetary Fund (IMF) and the World Bank placed Zambia in a ‘recipient’ relationship with these donor organizations. Like other similarly indebted countries, Zambia had little choice but to implement the neo-liberal economic reforms that comprised the Structural Adjustment Programmes (SAPs) instigated by the IMF and World

in Localizing global sport for development

in a country in which agriculture employs 70 per cent of the population and accounts for two-thirds of export revenues; and rapid population growth. The legacy of the failed structural adjustment programmes of the 1980s imposed by the International Monetary Fund and World Bank is evident in contemporary Senegal’s high public debt and chronic economic problems, particularly high unemployment. Despite all this, however, the country of Teranga is a stable nation with a well-known tradition of commitment to both democracy and human rights in Africa. 101 MUP

in Knowledge, democracy and action