`Why do they always take the most pessimistic view?'

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The Independent Online
The IMF's revised forecasts have caused dismay in Asia with many people in the region accusing the fund of talking down Asia's growth prospects.

"Why do they [the IMF] always take the most pessimistic view?" said an Asian government official from one of the countries receiving an IMF loan. "With things being as they are, if they talk us down it will become a self-fulfilling prophecy'

The IMF's new figures are, in most cases, more pessimistic than official forecasts from the individual countries although some of these have yet to be published because individual government forecasters keep being forced back to the drawing board as fresh news of disaster trickles in.

"Undoubtedly, people are going to feel the pain of this adjustment," said Michael Musa, the IMF's chief economist, when he presented the new figures.

The IMF is not alone in admitting that the extent of the financial crisis and its effect on Asia came as a surprise.

It said that it was now uncertain how long the crisis would last and feared that the market turmoil could spread even further.

The IMF, which in recent months has organised a record bail-out of more than $100bn for Thailand, Indonesia and South Korea, warned again that it was looking for the patients to swallow some bitter medicine in return for its rescue efforts.

In essence, the medicine consists of tough fiscal reforms, curbs on lending to reduce inflationary pressure and, although not explicitly stated, widespread closures of companies which are heavily in debt.

Malaysia's Prime Minister Mahathir Mohamad, has vowed that his country will not go to the IMF, despite its economic woes, because he views IMF conditions as a recipe for allowing Western companies to buy cheap assets in Asian markets. Moreover, he has asked why the Western bankers who freely distributed excessive amounts of credit should not have to suffer the same consequences as the recipients.

Dr Mahathir's views are increasingly gaining an audience in the region, not least in South Korea, the biggest recipient of IMF funds.

The President-elect, Kim Dae-jung, has again stressed that he will abide by the terms of the IMF loan agreement but is also pledged to avoid widespread unemployment, an inevitable consequence of the fund's requirements.