The Hindu : Business : `Fiscal budget helped SE Asia'

Online edition of India's National Newspaper
Wednesday, Sep 14, 2005

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Business

`Fiscal budget helped SE Asia'

V. Jayanth

Singapore Minister recommends managed currency float

CHENNAI: "What has happened in South East Asia now is that the economies are much fitter, policy making is disciplined and fiscal budgets are basically keeping the deficits much lower, controlling inflation," Singapore Education Minister Tharman Shanmugaratnam said here on Tuesday.

Mr. Shanmugaratnam, who is also the Deputy Chairman, Monetary Authority of Singapore (MAS), explained "The fiscal-monetary mix is a lot more disciplined now than ever before." Asked about the current state of the currency crisis in the region he told The Hindu "By and large the currencies are stable. But there are bound to be some blips now and then, as it happened in Indonesia. But the economic fundamentals are strong and stable." As a fall out of the economic meltdown and currency crisis that rocked the region in the late 1990s, he said "Governments have moved away from promoting investment in too exuberant a way. "You have less of conspicuous constructions. Investment rates appear to be much lower in South East Asia. But this is not a bad thing if we have retrenchment of investment and build on a more efficient base." That has helped currency stability to prevail, except for the occasional blips. On the currency rate system being followed, Mr. Shanmugaratnam noted that it was clear that there were no "simplistic solutions or models." It was not a choice merely between fixed exchange rate and a free float The Singapore model of "managed float" has succeeded and was being followed by more countries. This was an intermediate solution.

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