DAP calls on the Cabinet to reconsider the government decision not to allow IMF to publish its report on Malaysia to show a new openness, accountability and transparency

(Petaling Jaya, Friday): DAP calls on the Cabinet to reconsider the government decision not to allow the International Monetary Fund (IMF) to publish its report on Malaysia to show a new openness, accountability and transparency in Malaysian governance.

When asked yesterday whether the government would allow the IMF to publish its report on Malaysia, the Prime Minister, Datuk Seri Dr. Mahathir Mohamad said he saw no necessity for the report to be published.

He said: "Well, they (the IMF) have come, they have given their reports, the Ministry of Finance has read them, I don�t see why we should publicise anything. IMF�s Mr. Camdessus (its managing director) and the rest have already made their statements and they feel that we are doing the right thing."

The government�s refusal to give permission to IMF to publish its report on Malaysia has mystified Malaysians, who would want to know what the government is trying to hide from the people. Is it because the IMF report contained portions which would be unflattering for Malaysia despite Camdessus� favourable public comments?

The IMF�s World Economic Outlook 1998 released in Washington early this week, for instance, disagreed with Mahathir with regard to the causes of the Asian economic crisis, pointing out that they were mainly domestic although there were also external factors.

The key domestic factors causing the Asian economic crisis highlighted by the IMF, and virtually ignored by Mahathir in the past 10 months, were:

• first, the build-up of overheating pressures, which had manifested themselves in large external deficits and inflated property and stock market values;
• second, the maintenance for too long of pegged exchange rate regimes, which complicated the response of monetary policy to overheating pressures, and which came to be viewed as implicit guarantees of exchange value, encouraging external borrowing - often at short maturities - and leading to excessive exposure to foreign exchange risk in both the financial and corporate sectors;
• third, in financial systems, weak management and poor control of risks, lax enforcement of prudential rules and inadequate supervision, and associated relationship and government-directed lending practices which had led to a sharp deterioration in the quality of banks� loan portforlios;
• fourth, problems of data availability and lack of transparency, which hindered market participants from maintaining a realistic view of economic fundamentals, and at the same time added to uncertainty; and
• finally, problems of governance and political uncertainties, which exacerbated the crisis of confidence, the reluctance of foreign creditors to roll over short-term loans, and the downward pressure on currencies and stock markets.

The IMF World Economic Outlook 1998 also contained a section on the study on the role of the hedge funds in the Asian currency crisis in response to the charges by Mahathir and the Malaysian Government�s request that IMF study the matter. The IMF came out with the conclusion that there was no compelling evidence that hedge funds were the driving cause for the devaluation of Asian currencies.

(17/4/98)