PETALING JAYA: Anwar Ibrahim, who was finance minister during the 1997 Asian financial crisis, said tonight that he never fully accepted the recommendations by the International Monetary Fund, contrary to allegations frequently raised against him.
In a lengthy Facebook post today, Anwar, who is PKR president, said what he believed to be correct in the IMF’s assessment was that Malaysia faced a crisis of confidence which could be rectified by “real structural changes that increased transparency, accountability and ensured the independence of institutions.”
“I never accepted the IMF’s recommendations outright, despite what has been alleged,” he said.
Anwar acknowledged that Malaysia had recovered well in 1999. But so had other countries in the region “none of whom imposed controls”, he said, in a reference to the controversial measures taken by prime minister Mahathir Mohamad’s government in opposition to the IMF recommendations.
“But during that critical period, what did the government do to rectify the underlying structural problems? Hardly anything,” Anwar said.
Among the structural recommendations of the IMF at the time were the dismantling of Bumiputera preferences.
Anwar said that if one accepted that there are inevitable boom and bust cycles in modern capitalism, then prudence dictated that one should plan for the worst and do whatever is necessary to minimise the impact.
“This was no place for irrational exuberance,” he said, adding that the reforms which he proposed at the time were never adopted, but remained one of the key policies which Pakatan Harapan seeks to implement.
Anwar was finance minister in Mahathir’s cabinet at the height of the currency crisis. He was dismissed by Mahathir in 1998 in what was said to be a falling out over differences in handling the economy.
The Malaysian ringgit crashed to RM4.90 to the US dollar, the stock market collapsed, and massive corporate defaults took place, leading to a banking crisis.
Anwar was said to have then welcomed a rescue package by the IMF with stringent conditions, which was rejected by Mahathir. Instead, Mahathir later imposed capital controls, withdrew the ringgit from foreign exchange markets and pegged it to a fixed rate against the dollar.
The Mahathir policies were subsequently acknowledged by the World Bank as a good strategy, which led to Malaysia’s recovery.
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