Hong Kong's Participation in the Financing Package for Thailand

The Financial Secretary Donald Tsang, as Controller of the Exchange Fund, has decided to contribute to a financing package organised by the International Monetary Fund (IMF) to assist Thailand in making economic adjustments.

The package was agreed at a meeting organised by the IMF in Tokyo today (11 August). At the request of the IMF, participants agreed to a financing package totalling some US$16 bn including the proposed IMF contribution of US$4 bn.

The package includes: Hong Kong, US$1 bn; Japan, US$4 bn; Australia, US$1 bn; Singapore, US$1 bn; Malaysia, US$1 bn; Korea, US$0.5 bn; Indonesia, US$0.5 bn. China is seriously and actively considering her contribution to the package. Lending to Thailand will take the form of a medium-term loan at market interest rates.

The International Bank for Reconstruction and Development and the Asian Development Bank have indicated support for necessary financing and have plans for structural adjustment and sector reforms in Thailand.

"We are committed to regional monetary stability," said Mr Tsang. "The recent spate of speculative attacks has caused volatility of various degrees in the currency markets of Southeast Asia. Although the Hong Kong dollar has not been affected, the likely contagion effect is very real. It is in Hong Kong's interests as a leading financial centre in the region to see a strong and stable neighbouring environment. Our participation in the IMF financing package underscores that commitment."

"In consultation with the IMF, the Thai authorities have adopted a policy reform programme for the restructuring of Thailand's financial sector and its economy," said Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, who represented the Financial Secretary at the Tokyo meeting.

"The policy programme represents determination by the Thai authorities to steer the economy on the right track and restore the stability of the financial sector in Thailand. This will contribute to the overall financial stability of the region. Participants saw the meeting as an historic crossroads in regional financial co-operation, and possibly as a precursor of standing arrangements," said Mr. Yam.

Hong Kong Monetary Authority
11 August 1997