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IMF chief says capital controls not taboo, but last resort |
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June 2, 2000
BANGKOK, JUNE 1 (AP) - The new chief of the International Monetary Fund said Thursday that capital controls shouldn't be a taboo, but nations should only use them as a last resort.
Horst Koehler, who began a five-nation trip of Asia in Thailand, made the remark after a question on whether he would discuss controls in Indonesia, where President Abdurrahman Wahid has reportedly asked officials to study imposing them.
Koehler said he would discuss capital controls, and other economic issues, with Wahid when he visits Indonesia on Sunday. Indonesia is still drawing funds from an IMF-led rescue program launched during the Asian economic crisis in 1997.
Koehler, who took up his new position four weeks ago, said that capital controls had worked in discouraging outflows that can cripple an economy, citing the example of Chile.
"I don't think this kind of capital control decision could be a taboo," Koehler said. But Koehler warned that if the underlying economic management of a country was not sound, then capital controls would not stop speculative currency attacks.
Malaysia, another crisis-hit country, rejected the IMF's prescriptions of high-interest rates and other reforms to cope with the economic tumble and imposed capital controls.
Some are still in place, but the country has fared better than many financial analysts expected, believing the imposition of controls would mark an end to confidence in the economy.
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