Manila, Feb 6: Investors should look at individual Asian countries instead of the region as a whole because of the varying degrees to which different economies have been affected by the recent regional financial turmoil, the World Bank chief said on Friday. Bank president James Wolfensohn also said that the social cost of the financial crisis, especially on unemployment and poverty, must be addressed.``There is a regional issue impacting the exchange markets and stock markets throughout the region,'' he told a news conference here on the penultimate leg of an Asian tour of countries whipped by the seven-month-old turmoil. ``But having said that, I think that there are very great differences between the countries which I would guess over a short period of time might become apparent to the market,'' he said. Wolfensohn said that as of now, the crisis-stricken countries have not been ``sufficiently differentiated'' by investors, who tend to view the entire region as engulfed by the financial bushfire.
TheWorld Bank supremo visited Singapore, Thailand, Malaysia and Indonesia before coming to the Philippines for a first-hand assessemnt of the turmoil's effects. On Friday he left for South Korea.
Wolfensohn said Thailand and South Korea ``have a particular type of problem which is not only a downturn in their economic activities ... but a specific problem in terms of unhedged foreign borrowings principally from the banks.'' However, he expressed confidence about the ability of the two countries to deal with the crisis under governments ``that are now focusing on the problem.''
``So I think I have to say on any measure that we have made significant advances in those two countries,'' he said.
``In the case of Indonesia, you have a different problem in that unhedged foreign borrowing emerged from the private sector without the intermediation of the banks,'' Wolfensohn said. He expressed hope that ``the emerging consultation between the private sector and the foreign creditor banks'' in Indonesia would resolvethe problem.
``I guess what we need to do is hope and expect that there will be an agreement between the borrowers and the lenders to try and space out the repayment and carry the private sector through. That is now going on and I guess it's an open item until it is put together,'' he said.
The International Monetary Fund (IMF) last year arranged for more than US$ 100 billion in rescue packages for Thailand, Indonesia and South Korea, which have seen their currencies emaciated by the crisis and financial systems tottering under the weight of bad debts.
Malaysia, he said, has been affected by the crisis but ``they do have, I think, adequate reserves and also a very focused government to try and go through this period.''
The Philippines has been the least affected, aside from wealthy Singapore, Wolfensohn said, but urged Filipino monetary officials to tighten supervision of its financial sector.
Wolfensohn also stressed the importance of containing the social fallout from the crisis, such asincreasing unemployment, poverty, children forced out of school, and rising cost of medicine and food, among others.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
