IMF Managing Director Horst Köhler has just completed his first round of visits to Asia. From June 1 through June 6, Köhler met with senior officials and country leaders in Thailand, China, Korea, Indonesia, and India. Following his Asian tour, the Managing Director met with private sector financial representatives in New York on June 8.
On June 1, Köhler met with senior Thai officials in Bangkok, including Prime Minister Chuan Leekpai and Finance Minister Tarrin Nimmanahaeminda, to discuss economic developments in Thailand and the region. Köhler observed that regional initiatives can be very helpful in supporting sustained economic growth and stable financial relations among participating countries. Commenting on regional monetary initiatives in Asia, he said that the recent Chiang Mai Initiative of the ASEAN countries was “another example of enhancing regional cooperation” and noted that “the ASEAN+3 have clearly stated that they view the swap and repurchase arrangements as complementary to the work of the IMF.”
In Beijing, Köhler had a series of meetings with senior Chinese leaders, including Premier Zhu Rongji; Dai Xianglong, Governor of the People’s Bank of China; and Finance Minister Xiang Huaicheng. These meetings, according to an IMF news brief, gave Köhler the opportunity to hear Chinese views on the international financial system, the reform of the IMF, and China’s role in the IMF.
Speaking at a press briefing on June 3 following talks with high-level Korean officials, including President Kim Dae Jung, Minister of Finance and Economy Lee Hun Jai, and Bank of Korea Governor Chon Chol Hwan, Köhler commended the Korean government for implementing a structural reform program that has made the economy more open, competitive, and market driven. He cautioned, however, that there was no room for complacency with reform. Köhler also said that Korea’s recovery from the exchange rate crisis of late 1997 was remarkable and has left the economy less vulnerable to economic shocks.
Köhler met, on June 4, with Indonesia’s president Abdurrahman Wahid. At a press briefing following the meeting, Köhler said that a steady commitment by the government to implement economic reforms will strengthen the ailing rupiah. “The president and I fully agreed,” Köhler told the press, “that the introduction of capital controls would be counterproductive,” because such a decision would “deter foreign investors” and “hinder a sustained and broad economic recovery.” (On June 2, the IMF agreed to resume economic assistance to Indonesia following a review of Indonesia’s performance under a three-year Extended Fund Facility Arrangement (see News Brief No. 00/38, available on the IMF’s website: www.imf.org).)
Visiting India on the last leg of his journey, Köhler warned against the country’s growing fiscal deficit. Acknowledging that India has been one of the 10 fastest growing economies in the world over the past two decades, Köhler said that “there should be no complacency.” India’s most important short-term objective, Köhler said, should be fiscal consolidation. He also stressed at a press conference the need to strengthen the social sector to reduce poverty. Köhler termed India’s objective of achieving an economic growth rate of 8–10 percent “ambitious but valid.”
On his return to the United States, Köhler attended a meeting in New York, sponsored by the Institute of International Finance, with representatives of the private financial sector. The discussions focused on closer cooperation between the IMF and the private financial sector.