Japan, Thailand agree on 2.3 bil. dlr aid package

Asian Economic News, Nov 9, 1998

TOKYO, Nov. 6 Kyodo Japan and Thailand agreed Friday on a 2.3 billion dollar aid package to the economically embattled Southeast Asian country including contributions from the World Bank and the Asian Development Bank, Japanese Finance Ministry officials said.

More than 1 billion dollars of the package will be extended by Japan under its newly launched initiative to spend 30 billion dollars to underpin troubled Asian economies, the officials said.

Thailand plans to use the aid mainly to cover fiscal fund shortages and implement economic stimulus measures, they said.

A joint statement issued Friday by the Japanese and Thai governments said Tokyo "expressed its firm commitment to provide strong support for Thailand in its restructuring efforts." The statement was made available after a Japanese government delegation finished talks held in Bangkok on Thursday and Friday with Thai Finance Ministry officials on Tokyo's planned financial aid.

While welcoming "the significant progress" that Thailand has made in economic and financial reforms, the Japanese team also said Tokyo will examine closely Bangkok's request for financial support and "reach a conclusion as soon as possible." The Japanese mission, headed by Kiyoto Ido, deputy director general of the Finance Ministry's International Bureau, followed up on talks held in Tokyo last month between Finance Minister Kiichi Miyazawa and his Thai counterpart, Tarrin Nimanahaeminda.

According to the statement, Thailand "welcomed continued support and emphasized the importance of the New Miyazawa Initiative in helping economic recovery in the region." Thailand's request for financial support from Japan covered the need to boost the economy and address critical difficulties such as social ills, problems in agriculture and industry, small and midsize companies, and the financial sector, the statement said.

The delegation also "reaffirmed its openness to identifying further areas of support in cooperation with the Thai government in the future," it said.

The new Japanese initiative, unveiled early last month, envisages the Export-Import Bank of Japan guaranteeing debts of Indonesia, Malaysia, the Philippines, Thailand and South Korea which were hardest-hit by the financial crisis.

The scheme would also enable the bank to purchase public bonds from these countries and pay the interest on loans made to them to help them raise funds.