How The East Was Won

Broadly speaking, the IMF conditionalities amount to the standard medicine of fiscal and monetary tightness; but its ironical that the same conditionalities should apply to these very countries whose fiscal prudence had earlier been lauded by the IMF itself. The result is going to be a sharp cut in social programmes in many of these countries, adding to the woes of the relatively worse-off populace.

The tight monetary policy also means that industry will have to pay extremely high interest rates, bringing the very viability of many units into question. Even now, many units are not getting any working capital. This can only add to the prospect of unemployment and weaken the asset quality of the already beleaguered banking and financial system. The prospect of industry closure for want of working capital and indeed demand, and the spectre of growing unemployment, have already led Thailand to decide to send back two million immigrant workers.

Even as the IMF insists on the closure of weak banks, the government is being forced to take over their liabilities