ABSTRACT
In early 1996 Thailand seemed to many to be a model of developmental success. Over almost a decade the Thai economy had been the fastest growing in the world, with moderate inflation, a stable exchange rate, seemingly healthy foreign exchange reserves and a rapidly declining incidence of absolute poverty. Many observers expressed misgivings about the apparent increase in income inequality, but in macroeconomic terms Thailand’s performance seemed exemplary. For many years the World Bank, the International Monetary Fund (IMF) and the United Nations Development Program had been praising Thailand’s stable macroeconomic management as an example that other nations might follow. The central bank, the Bank of Thailand (BOT), was regarded as a bastion of financial soundness.
