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International Monetary Fund

Abstract

This paper analyzes the origins, implications, and solutions for the Asian financial crisis. From the perspective of a member of the Executive Board of the IMF, as Asian problems were building, the IMF overlooked weaknesses in bank and corporate balance sheets in much of Asia: the IMF was unaware of the extraordinary leverage of Korean companies, which in some cases reached a ratio of 600/1 debt to equity. The IMF did not focus on the weak accounting and disclosure practices of banks and nonbanks or generous rollovers of banks to their key clients.

International Monetary Fund

Abstract

The Asian financial crisis that broke out in July 1997 in Thailand, and its subsequent global reverberations, dominated the IMF’s work in 1997/98, absorbing an unprecedented amount of time of the Executive Board, management, and staff. The crisis—whose global consequences continued after the end of the financial year—also prompted a record level of IMF lending in 1997/98, adding immediacy to the need to strengthen the financial resources of the institution to enable it to continue playing a fully effective role in the globalized world economy. The crisis also led to the creation of a new lending facility (the Supplemental Reserve Facility); stepped-up work on strengthening the conduct of IMF surveillance; and, more generally, led to the elaboration of a framework for strengthening the architecture of the international monetary system. Separately, the Executive Board undertook an extensive review—drawing on both internal and external assessments—of the IMF’s concessional lending facility for low-income countries (the Enhanced Structural Adjustment Facility) and continued its work aimed at ensuring the uninterrupted availability of financial resources for the ESAF. Together with the World Bank and other creditors, the IMF made important headway in implementing the initiative to reduce the external debt burden of a number of heavily indebted poor countries (the HIPC Initiative).

International Monetary Fund. External Relations Dept.

Within a two-year span, Korea’s economy plunged into a severe recession and now is recording a dramatic turnabout. What triggered the crisis? What prompted the recovery? And what remains to be done to ensure that Korea’s economy sustains strong growth within a stable macroeconomic environment?

International Monetary Fund

Abstract

In 1998/99, financial markets stabilized and economic activity bottomed out in the emerging market economies of Asia, with signs of an economic turn-a-round emerging in some cases by early 1999. During the year, external financing conditions facing emerging market economies deteriorated markedly following the Russian crisis in August, which also, for a time, gave rise to fears of a more widespread credit crunch. Conditions improved following a broad-based easing of monetary conditions among the industrial countries, although Brazil’s crisis in January 1999 caused a temporary setback.

Karin Lissakers

Abstract

I want to look back, and tell you, briefly, how the Asian crisis looked from the perspective of a member of the Executive Board of the International Monetary Fund. Thanks to the IMF’s vaunted secrecy, many of you may not even know that there is an Executive Board—24 directors representing 182 member countries—which decides all major fund policies and approves all programs and disbursements of fund resources. Several of my board colleagues are here tonight.

Lachman Desmond

Abstract

The Asian currency crisis that began in July 1997 with the devaluation of the Thai baht shows little sign of abating. Indeed, the very poor state of the domestic economies in the region, which as yet show no real signs of improving, would suggest that this crisis is likely to deepen in the period ahead and that it could spread further to countries that have so far not felt the full force of the crisis. This would make one think that we may very well only be at the end of the beginning of this crisis rather than at the beginning of its end. As such, in attempting to draw any definitive conclusions about this crisis, I find myself much in the position of Chou en Lai, the former Chinese premier who, when asked in 1979 about his opinion of the French Revolution some 200 years before, replied that it was too early to draw definitive conclusions.

International Monetary Fund

Abstract

Chief among the financial highlights of 1998/99 was the increase in IMF quotas under the Eleventh General Review of Quotas, which took effect on January 22, 1999. As of the end of 1998/99, total IMF paid-in quotas reached SDR 208 billion ($281 billion). Prior to the quota increase, the IMF’s liquidity had fallen to a low level, and the IMF had resorted to borrowing under the General Arrangements to Borrow and the recently established New Arrangements to Borrow. These borrowings were repaid following the quota increase, and by the end of the financial year the IMF’s liquidity ratio had risen to 89 percent.

Larsen Flemming

Abstract

Earlier speakers have already identified a number of internal factors that appear to have played an important role in the buildup to the Asian crisis. I will, therefore, first discuss the role of the external environment and then briefly address the implications of the crisis for Asia’s near-term growth prospects.

International Monetary Fund

Abstract

The IMF consists of a Board of Governors, an Executive Board, a Managing Director, a First Deputy Managing Director, two Deputy Managing Directors, and a staff of international civil servants. The institution’s founding Articles of Agreement require that staff appointed to the IMF demonstrate the highest standards of efficiency and technical competence and reflect the organization’s diverse membership.

Ueda Kazuo

Abstract

I would like to start by saying that the economic crisis in East Asia since 1997 has not been an “Asian” crisis, but resembles a typical domestic financial crisis with some international aspects added on.