Malaysia's World Bank loans: the real context


Malaysia's World Bank loans: the real context

Malaysia's World Bank loans: the real context

Tuesday, December 20, 2011
  • HUSS0296
Tun Dr Mahathir has never stated that Malaysia did not accept World Bank loans...-Pic by Hussein Shaharuddin.

KUALA LUMPUR: Umno Youth Exco Tun Faisal Ismail Aziz said a recent press statement by Parti Keadilan Rakyat (PKR) Strategic director Rafizi Ramli regarding World Bank loans showed he (Rafizi) had failed to do his research and didn't understand the context of the currency crisis of the late 1990s.


Writing in his blog, Tun Faisal said it is true that Malaysia has accepted technical assistance and loans from the World Bank since the 1970s, and also accepted them at the time of the currency crisis. He pointed out, however, that those loans were accepted without any conditions that could cause the country to be "pawned off".


Tun Faisal said when the currency crisis hit Malaysia in 1997, the International Monetary Fund (IMF) offered money from various sources, including the World Bank and several developed countries, as 'Rescue Packages' that came with strict conditions that he said would have led to Malaysia being "economically recolonised".


"While neighbouring countries were already beginning to accept this offer from the IMF because they couldn’t hold off attacks from foreign currency speculators," he said, "Malaysia under the leadership of Tun Dr Mahathir Mohamad held out because he didn’t want to pawn the country off into the hands of world capitalists, even though it was reported that the Minister of Finance at the time repeatedly praised the IMF and implemented their prescriptions and those of the World Bank without any help from them."


He said the steps Tun Dr Mahathir took at that time included lowering interest rates, the introduction of "currency pegging" -- which made the Ringgit less vulnerable to currency speculation -- and the introduction of capital controls. 


Tun Faisal said that even after rogue currency traders attacked the Ringgit and rating agencies lowered the country's debt rating, causing the KLSE to drop to its lowest point in years and leading to contraction in several sectors of the economy, Malaysia was still the quickest to recover from the crisis without assistance from the IMF.


"All of this was due to the wisdom of Tun Dr Mahathir and his courage in using unorthodox methods to save the country," he said.


Tun Faisal said that Rafizi -- who was still pursuing his studies overseas when the crisis hit and didn't witness the effects before and after Mahathir's intervention -- was wrong because he failed to differentiate between unconditional loans and 'rescue packages'.


"Tun Dr Mahathir has never stated that Malaysia did not accept World Bank loans," said Tun Faisal, "but rather conventional loans accepted since the 1970s without conditions that would cause the country to be recolonised."


"Tun Dr Mahathir never wrote a letter asking for or accepting a Rescue Package, which was done by certain Presidents and Prime Ministers of Asian countries at that time," he said.


"If such a letter exists," he added, "please ask Anwar Ibrahim to show it, because as an advisor to the World Bank surely he could easily get it."


"It would probably be easier to find that letter, than to find the Omega watch he lost recently."


Read Tun Faisal's full post (in Bahasa Malaysia) HERE.