Improved public disclosure of key economic information is also envisaged under the program. Structural reforms to address the causes of the present economic difficulties are essential to the strategy, in particular the strengthening of the financial system, while minimizing moral hazard risks. The success of the program hinges crucially on isolating insolvent institutions and ensuring the viability of those remaining through early recapitalization, and strengthened regulatory requirements and supervision. An important determinant in the timing and strength of the recovery will be the turnaround in the export sector. The principal objective of the program for 1997-98 is to achieve an orderly adjustment of the domestic economy to the sharp, forced reduction in the current account deficit to about 5 percent of GDP in 1997 and 3 percent of GDP in 1998.
Fiscal policy is the key to the credibility of the overall program.
An improvement in the financial position of the state enterprises will be effected through increased oversight on expenditures and a greater emphasis on privatization. In the near term, this will entail significant increases in the prices of some utilities and petroleum products, although bus and rail fares will remain subsidized for social reasons. Monetary policy is designed to support the inflation and balance of payments objectives of the program. Under the program, reestablishing domestic and external confidence in Thailand's financial system is crucial to maintaining an open capital account, within existing financing constraints. A solvent and profitable financial sector is also a clear precondition for the restoration of rapid growth and for removing the threat of recurring financial crises.