Thailand to refuse 'breath of oxygen'

Only a handful of tsunami-hit countries have accepted an offer of a “breath of oxygen” from rich nations to suspend billions of pounds in debt repayments, it was revealed today.

Only a handful of tsunami-hit countries have accepted an offer of a “breath of oxygen” from rich nations to suspend billions of euro in debt repayments, it was revealed today.

Thailand will reject the proposal in an effort to retain its “standing in the international financial markets", said French Finance Minister Herve Gaymard.

Indonesia, Sri Lanka and the Seychelles were the lone three nations expected to accept the offer made by the Paris Club of creditors, who met in the French capital today.

Thailand, which with Indonesia and Sri Lanka owes €34.2bn, has turned down the moratorium “simply because they have lower debt levels than the others,” said Gaymard.

France and the other 20 industrialised nations within the Paris Club, which includes the US, Britain and Ireland, regard the moratorium as “completely indispensable” and a “vital breath of oxygen” in helping Asia’s tsunami victims recover, Gaymard said.

But even Indonesia suggested that cash aid was perhaps more useful than the moratorium.

“Clearly we would equally appreciate any donations instead of newly accorded credit,” Indonesian Foreign Minister Hassan Wirajuda said in Paris.

Indonesia owes nearly €100bn internationally – around 80% of its gross national income.

The low acceptance rate of the Club’s proposal raises questions whether relief is needed at all, as some economists have argued that the tsunami did no insurmountable damage to local economies nor cause regional stock markets to collapse.