The controversy surrounding them concerned their sequencing. There are several difficulties with these arguments. First, without coming to grips with the underlying causes of the crisis, governments would have failed to restore confidence-a necessary element of stabilization. Second, in the case of the banking system, the financial panic did not allow governments the luxury of postponing reforms. Third, while waiting for better times to undertake reforms sounds good, sadly, the historical experience is different.
Governments usually undertake major reforms only under the pressure of a crisis.
The stabilization effort succeeded, and the results are clear for all to see. By mid-1998 exchange rates had stabilized, international reserves were being rebuilt, inflation had been contained, risk premia had fallen, and investor confidence and capital inflows returned. Of course mistakes were made on the way. The programs were certainly less than perfect, the political circumstances were difficult, and there were shortfalls in implementation. However, by and large, Governments got it right and created the stage for a recovery.