At both ends of the Asian Financial Crisis the IMF can be found meddling. In the years leading up to the crisis, the IMF took great efforts to promote currency liberalization in the region in the name of globalization. Thailand and the Philippines, two countries hit hardest by the crisis, offer attractive incentives to manufacturing firms like tariff-free export zones (Kramer). These as well as the availability of cheap labor made these countries attractive places for western firms to set up their operations. Over time, more and more foreign debt weighed down the balance sheets of Asian companies.
The event that became known as the tipping point was when Thailand unpegged the Baht from the dollar (Wikipedia). The Thai government was already virtually bankrupt at this point, and the lack of confidence in the currency forced people to hold their money in other currencies. With no confidence for the Baht, Thai firms began taking out loans in dollars or other stronger currencies, but were unable to repay these loans due to the fact that their earned income was in Baht, whose value was declining multiples every day against the dollar.
Ultimately, the IMF stepped in with a $40 billion dollar bailout, which came with the stipulation that banks maintain very high interest rates (Nanto) in order to save companies whose debt was increasing rapidly due to the declining value of the domestic currency to pay off foreign debt loads. In addition, very high interest rates were a prescription for making the Baht more attractive as a means of savings. Interest rates climbed as high as 60%, making loans at this rate virtually unpayable, driving many companies into bankruptcy (Wikipedia). Critics said that the IMF intervention was a complete failure which led to the severe contraction of the Asian markets. Not only this, but the domestic upheaval led to the resignations of Indonesian President Suharto and Thai Prime Minister Yongc...