US officials began a whirlwind tour of Asia's economic "tigers" yesterday, seeking to restore confidence by encouraging countries to stick to policies prescribed by the International Monetary Fund (IMF).
The mission, led by Deputy Treasury Secretary Lawrence Summers and starting in the island state of Singapore, is also expected to take in Indonesia, Thailand and South Korea, the recipients of international rescue deals totalling more than $100 billion.
"We are here, on behalf of the president (Bill Clinton), to consult with the countries in the region on economic policy and to urge sound policies that can promote confidence and stability," Summers said. The officials, like the world's financial markets, are especially worried about the situation in Indonesia. Its rupiah currency plunged 20 per cent one day last week amid concern about the health and political future of President Suharto and doubts about his commitment to IMF reforms.
Panicky shoppers have stripped supermarket shelves, and some newspapers have taken the unprecedented step of calling on the long-serving president to step down.
US Defence Secretary William Cohen, in Malaysia at the start of his own Asian tour, said he would tell the people of the region that Washington was a steady ally but that economic reforms were needed.
"I think they (Asian states) are looking at a loss of confidence in some of their economies by virtue of some of the past practices which have to be reformed," Cohen said,
The White House has said Summers will press Suharto to follow the IMF plan, adopting the budget and infrastructure conditions attached to a $10 billion loan.
But the visitors' policy options are limited. They cannot force governments in the region to adopt painful policies, although they can highlight the risks of getting things wrong and lobby for IMF recipes as the best way to go.
Summers started the tour with talks with Singapore Finance Minister Richard Hu and Senior Minister Lee Kuan Yew.
Accompanied by officials from the State Department and the US National Security Council, Summers will meet Prime Minister Goh Chok Tong today before leaving for Jakarta.
The IMF, countries in the region and other multilateral lending institutions are making more than $40 billion available to Indonesia - provided reforms stay on track.
The IMF is taking a new look at the reform programme and at government policies, and Summers' visit will coincide with a monitoring mission led by IMF First Deputy Managing Director Stanley Fischer.
Meanwhile, an alliance of conservatives and liberals is taking shape in the US Congress to block billions of dollars for the International Monetary Fund, money that could be used to help calm financial panic sweeping Asia.
Lawmakers and lobbyists say the coalition aims to defeat the Clinton administration's request to give the IMF nearly $19 billion to boost its resources.
