"Do you want IMF Part Two?" he asked.

That was enough to give his audience goose bumps.

Thaksin has repeatedly claimed he was the saviour who rescued Thailand from the IMF's bitter prescriptions. He said the nation could claim victory after he managed to pull the country out of the IMF programme in 2003, two years and five months earlier than the original schedule.

Mention of the IMF reminds Thais of the worst times in their recent history. In 1997, they faced a horrible economic crisis after the sudden outflow of capital due financial liberalisation. IMF policy required the country to follow an austerity policy and impose fiscal constraints to stem the economic nosedive.

However, the Thaksin government paid off the last batch of loans worth US$4.8 billion (Bt186 billion at today's exchange rate) to the IMF between January and July 2003, much earlier than scheduled. Thaksin claimed that his administration had set Thailand free from the IMF and restored the Kingdom's dignity.

Thailand sought an IMF-led back-up facility of $17.2 billion in August 1997, shortly after the government was forced to abandon its fixed exchange-rate regime after an attack by currency speculators.

However, the Thai government actually used only $12 billion of the loan, because the country's economic fundamentals were sound - unlike some Latin American countries that had also sought IMF funds.

The early retirement of debts owed to the IMF and other international central banks was, in fact, beneficial to the country, because it saved Thailand up to $111 million in interest.

But Thaksin's claim of victory is not totally justified, because the previous government should also be  credited for repaying the debt.

Moreover, the country managed to exit the IMF programme largely because of the austerity policy prescribed upon debtors. In fact, Thaksin was not known to be a big fan of an austerity policy at all.

Besides, Thailand had strong official reserves of $38.6 billion at the end of 2002, while foreign short-term debt fell to $14 billion. The current-account and balance-of-payment surpluses were recorded as high as $6.7 billion and $4.8 billion, respectively.

To address Thaksin's recent messianic claims, it is unlikely the Kingdom would need to seek financial aid from the IMF again any time soon.

Thailand's fundamentals are currently much different from the fragile economic state left in the wake of the 1997 crisis. Our international reserves surged to $52.1 billion at the end of last year, compared with $27 billion at the end of 1997. Foreign short-term debt at the end of last year was $16.7 billion, far lower than the $38.9 billion at the end of 1997.

The debt-service ratio that shows our debt obligations declined from 19.4 per cent in 1997 to 9.8 per cent last year.

The country's swap obligation was minus $3.8 billion at the end last year, far different from the $18 billion at the end of 1997. Thailand's balance of payments at the end of last year was $5.4 billion, much higher than the minus $10.5 billion at the end of 1997.

GDP growth in 1997 showed a recession at minus 1.4 per cent, compared with last year's growth rate of 4.5 per cent.

Also, the country's financial sector is much improved from in the past. Non-performing loans (NPLs) of financial institutions declined to 8.16 per cent of total loans at the end of last year. They are expected to decline further to less than 5 per cent in a few years, compared with their peak of 42 per cent in 1998, when the baht shot up to its peak of Bt52 to the dollar.

Certainly, most economic indicators do not show that Thailand is in any danger of soon needing to seek financial help from the IMF, as claimed by the caretaker premier. On the other hand, there is also a question about whether the country would need new IMF aid if a new government continued to implement the populist policies promoted by the Thaksin administration.

Recently, the government needed to borrow up to Bt250 billion in loans, because the Finance Ministry's treasury reserves had dried up from so much government spending. This shows a threat to fiscal stability.

Thus, it seems that Thais have something else to worry about.

It's not a question of whether Thaksin will come back to defend Thailand from another IMF crisis. The real concern is that if Thaksin returns and continues his populist schemes, the sequel to another IMF crisis may be much harder to heal.

Finance Reporters

The Nation