Advantages Of IMF Policy

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In Malaysia
Introducing IMF Policies
Malaysian government followed the standard and policies of IMF prescription in facing the crisis. For example, Malaysia raised its interest rates to stemming the capital outflows and floated its currency rate in order to free capital flows. Besides that, Malaysia redefined the definition for non-performing loans from six-month arrears to three-month arrears.
Mahathir’s Counter-Strategy
National Economic Action Council (NEAC) set up by Dr. Mahathir as an alternative to orthodox IMF policies to centralized decision making and policies. The objectives of NEAC were to stabilize the currency, restore market confidence, maintain financial market stability, restructure corporate debt, recapitalize and restructure the banking and financing system. Besides that, Bank Negara reduced interest rates and statutory reserve requirement (SRR) to loosened monetary policy. The interest rates were reducing from 11% to 3% in 1999 and the SRR declining from 13.5% till 4%.
Foreign Exchange Rate Policies
Dr. Mahathir fixed the ringgit (MYR) exchange rate RM 3.8 per US $. It helps to stable the value the Malaysian currency.
Selective Capital Controls
Dr. Mahathir imposed a one-year moratorium from the purchase date of shares to foreign institutions on repatriation of proceeds from the …show more content…

Thailand also fostered the restructuring of distressed financial institutions and enacted budget cuts to free up resources to help finance the restructuring and to support improvement in the current-account position. Besides that, Thailand government deepened the role of the private sector in the Thai economy and sought to attract foreign capital through other reform measures. Monetary policies of Thailand focused on both supporting exchange-rate stability and fostering economic recovery. As the Thai Baht began to steady, the Thailand government decided to reduce interest

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