The IMF has released a Press Information Notice (PIN) on their 1997 Article IV Consultation with Singapore . The PIN summarises the IMF Executive Board's discussion of the IMF staff's appraisal of Singapore's economic developments and policies. The Singapore government welcomes the IMF's endorsement of its macroeconomic management during the past year under difficult conditions of regional financial market turbulence.

2   MAS wishes to clarify a number of points raised in the PIN on our exchange rate policy and developments and disclosure of data in the banking sector.

3   Exchange rate policy. We accept the general characterization of our exchange rate policy in 1997. However, the PIN states that the Singapore dollar nominal effective exchange rate (NEER) and real effective exchange rate (REER) both depreciated slightly, by about 1% in 1997. We wish to clarify that these movements are based on the IMF's internal computations. MAS' own computations show that the Singapore dollar NEER appreciated slightly in 1997, especially after July. Singapore's strong economic fundamentals protected the Singapore dollar from depreciating to the same extent as the other regional currencies. For the Singapore dollar REER, MAS concurs with the IMF that it declined slightly, because our unit labour cost increased by less than those of our competitors. There-fore overall our competitiveness improved. Going forward, we will continue to manage the Singapore dollar flexibly against a trade-weighted basket of currencies. The primary objective of our exchange rate policy remains unchanged, namely to maintain price stability.

4   Local Banks. The IMF statement envisaged an increase in provisions for classified loans and consequent deterioration in earnings of the local banks. This has since been reflected in the banks' 1997 results, released in March 1998. The banks made provisions on all classified loans as at mid-January, the bulk of which were in the substandard category. They also made large general provisions on regional loans that were still performing, as a precautionary measure. The banks' property loans in Singapore generally remain significantly below current collateral values. About half of their property exposure comprises housing mortgages, which are less risky. The IMF also urged that disclosure standards of banks be improved. The banks have provided detailed information on their exposure to the region, levels of classified loans and provisions, and capital ratios, with their 1997 results. MAS appointed a Committee on Banking Disclosure last year, which will recommend changes to bring local bank disclosure standards in line with developed countries.