Thailand does not need financial assistance from the IMF during the pandemic because of the country's strong economic fundamentals and the financial sector, says the Bank of Thailand.
"There are some concerns that Thailand could ask for financial assistance from the IMF to overcome this crisis, similar to the Asian financial crisis in 1997. But we do not need it because of the country's strong economic fundamentals after learning from the 1997 financial crisis," said governor Veerathai Santiprabhob.
There are 102 IMF member countries that require financial support from the IMF, from a total of 195 member countries, he said.
Thailand's strong economic fundamentals are based on a current account surplus, low foreign debt and the high capital base of financial institutions, all supporting assistance measures during the crisis, said Mr Veerathai. This should support the country's gradual economic recovery.
On Aug 20, 1997, the IMF approved a stand-by credit for Thailand, authorising drawings of up to 2.9 billion special drawing rights (SDR) or about US$3.9 billion.
On July 31, 2003, Thailand completed early repayment of its outstanding obligations of 68.75 million SDR (about $96 million).
Before that meltdown 23 years ago, Thailand's economy became increasingly vulnerable since 1993 after a previous decade of economic success from a widening current account deficit, high external debt burden and a serious weakness in the financial system, particularly but not exclusively finance companies, according to an IMF statement.
On July 2, 1997, the Thai authorities introduced a managed float of the baht, which subsequently depreciated about 20% against the US dollar during the month.
However, reports that borrowers were facing increasing difficulties rolling over short-term debt intensified outflows from finance companies. Accelerated injections of financial support from the Financial Institutions Development Fund precipitated a widespread loss of confidence, said the IMF.
"The Thai economy could recover like the Nike logo [swoosh-shaped recovery]. The economy will take around two years to recover," said Mr Veerathai.
The central bank affirmed an existing assumption that Thailand's economy had bottomed out in the second quarter, attributed to economic activities being affected by lockdown policies worldwide.
With the easing of lockdown measures by the government, this will gradually improve economic momentum in the third and fourth quarters, he said.
Thailand's economy is likely to return to a normal growth rate similar to before the outbreak in 2022. The central bank forecasts GDP to shrink by 8.1% this year.
For third-phase debt relief measures, the central bank requires financial institutions to prepare several financial instruments in response to the actual requirements of customers, rather than blanket assistance measures, said Mr Veerathai.
General financial assistance measures used in the second phase helped provide debt relief for many borrowers, he said, but these weaken financial institutions and dampen the financial system.
The banking sector has been facing higher non-performing loans following the pandemic. However, bad debts will not jump significantly from financial easing measures, said Mr Veerathai.
He said the central bank will prolong the 500-billion-baht soft loan scheme set to expire this year-end to the end of next year, aiming to support the liquidity of small and medium-sized enterprises.
The decree allows for the soft loan scheme to be extended by two times for a six-month period each round.
The central bank also discussed with the Thai Credit Guarantee Corporation extension of the debt guarantee for the soft loan scheme from the existing two-year condition.
The baht's depreciation is attributed to external factors, especially higher financial volatility in the capital and money markets worldwide during the outbreak, said Mr Veerathai.
Central banks' monetary and financial measures across the world have affected market liquidity and foreign capital movement, he said.
For domestic factors, a recent change in Thailand's political landscape is a concern among foreign investors, leading to offshore capital outflows, said Mr Veerathai. This has weakened the baht against the both dollar and regional currencies, he said.
The baht continued to weaken since last Thursday after the resignations of several key officials.