IMF/WB & Malaysia Internal Politics

Henry C.K. Liu hliu at mindspring.com
Sat May 15 07:01:29 PDT 1999


Malaysia snubs World Bank loan, cancels IMF meeting

Move comes after World Bank chief meets Anwar's

wife

From Eddie Toh in Langkawi

ALAYSIA has snubbed a US$300 million

(S$513.2 million) loan from the World Bank

a day after its president James Wolfensohn

met the wife of former deputy prime minister Anwar

Ibrahim.

Malaysia has also called off a meeting with

International Monetary Fund managing director Michel

Camdessus in another sign that the country has not

repaired damaged ties with multi-lateral agencies who

have advised a more conservative economic approach.

Second Finance Minister Mustapa Mohamed said

Malaysia would no longer seek the balance of an

agreed US$1b loan from the World Bank. To date,

US$700 million of that amount has been disbursed.

Mr Mustapa attributed the decision to a rosier

economic outlook but his statement came a day after

Mr Wolfensohn had met Wan Azizah Wan Ismail --

the wife of jailed leader Anwar Ibrahim -- in KL en

route to Langkawi for the sixth Asia-Pacific Economic

Cooperation (Apec) conference.

Speaking in the East Malaysian state of Sabah, Dr

Mahathir could not resist a sarcastic jibe at the

meeting.

"I hope she can resolve the World Bank problem and

tell Mr Wolfensohn how to run it," Reuters quoted Dr

Mahathir as saying to reporters when asked about

Thursday's meeting.

"I'm quite sure she will give good advice to him."

In Langkawi, Mr Mustapa said: "Any Malaysian can

meet anybody ... We also believe Malaysians are

rational and in general Malaysians do not like

foreigners to interfere in the domestic politics of

Malaysia."

He was speaking at a press conference following the

opening of the Apec meeting yesterday.

Besides improved economic conditions, he said

Malaysia has secured over 10 billion Malaysian ringgit

(S$4.5 billion) in loans under Japan's New Miyazawa

Initiative. Malaysia will also soon embark on a global

roadshow to sell up to US$3 billion worth of sovereign

bonds to help finance its economic recovery.

Diplomats criticised the snubbing of the World Bank

loan pointing out that the loans are cheaper and do not

come with the type of strings attached to other sources

of funds.

The diplomats said that the Japanese money, which

was pegged at low interest rates, may have conditions

attached to it.

"They wanted a piece of the action when it gave the

money for the infrastructure projects," said an Asian

diplomat.

As for the US$3 billion bond issue, which is also

aimed at boosting the credit worthiness of Malaysia,

they said it will be more expensive than loans from the

World Bank.

Last November, the Malaysian government was irked

by meetings between Dr Wan Azizah and several

foreign leaders on the sidelines of the Apec conference

in KL.

And last month, tempers flared again when Dr Wan

Azizah, who recently formed an opposition party to

challenge the national ruling coalition, met Philippine

President Joseph Estrada while on a visit to Manila at

the invitation of former president Corazon Aquino.

While Mr Mustapa went ahead with his meeting with

Mr Wolfensohn last night, the meeting between Dr

Mahathir and Mr Camdessus was called off.

Mr Mustapa said it was merely due to a conflict of

their schedules. "PM is now in Sabah and Camdessus

was not able to agree to the time proposed."

Diplomats said the aborted meeting could also be due

to Malaysia's frequent criticisms of the IMF's

shock-therapy approach to tackling Asia's economic

crisis.

Malaysia has also called for checks on currency

trading which is at odds with the views of the IMF and

incoming US Treasury Secretary Lawrence Summers.

Yesterday, Malaysia showed no signs of backing off

from that stance.

"Although there have been signs of stability in the

world economy, the need for reforms is there because

the risk remains to be tackled. We do not want this

urgency to reform the international system to wane in

the current stable climate," Mr Mustapa said.

© Copyright Singapore Press Holdings Ltd, 1999. All rights reserved



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