"There are still problems despite the euphoria about Thailand currently being talked about in some media," said Hong Kong-based Bob Broadfoot, managing director of the Political and Economic Risk Consultancy (PERC).

"It would be a mistake to think that all the systemic misgivings that contributed to the crisis have been solved," he said.

So why the fuss about crisis-hit Thailand's apparent fortune. Analysts agree Thailand has come a long way since the July 2, 1997 baht devaluation that tossed its finance sector and the real economy into a recessionary tailspin and sparked Asia's worst financial crisis in decades.

There has been a massive shakeout in the financial sector, with the closure of scores of debt-ridden finance companies and even some marginal loss-making banks.

Latestleading indicators show negative inflation, low interest rates and a slight pick up in manufacturing and private investment activity. Slight quarterly growth has been posted for the first time in two years in the second quarter of this year.

The Thai bourse has benefited from heavy inflows of "hot" foreign money and reached new year highs in past weeks, while the baht hit a five-month high of 36.40/36.45 per dollar last week.

And political stability seems assured for now as the confident seven-party coalition government of premier Chuan Leekpai remains solidly in power with determined finance minister Tarrin Nimmanahaeminda unchallenged as economic supremo.

Opposition parties, which lost credibility during their tenure because of the crisis, are regrouping to face elections due by October 2000.

The once-mighty military, the perpetrator of many coups in the past, is firmly back in its barracks, lending stability.

Tarrin and Thailand's benefactor, the International Monetary Fund, see at least onepercent growth for the country this year after a sharp 8.3 per cent contraction last year.

Most banks have recapitalised and put themselves on a firmer footing but remain mired in non-performing loans that average an alarming 46 per cent of total loans.

Analysts warn that because the government is heavily involved in helping to recapitalise some banks and has borrowed heavily from multilateral agencies abroad to finance a recovery, Thailand is on course to again become a heavy debtor.

"Among those banks that have been recapitalised, the capital is low grade debt capital or debt capital disguised as equity capital," said economist Richard Henderson.

"There is a danger that banks could be compelled to become wards of the state, and that will bring more political and economic burdens for the government," he said. "There is also the question of the sustainability of the public sector debt...not an issue this year but could be when rates rise with a recovery."

Roy Owen, Deloitte Consulting Thailandcountry manager, worries complacency may set in now that banks are recapitalised.

"My concern is that...with banks having raised their capital and the capital markets rewarding them with higher prices for their stocks, banks will feel less impetus to make changes."

Already banks with trillions of baht in non-performing loans and paralysed by the crisis are refusing to lend for fear of incurring more bad debt.

The Thai credit system has nearly ground to a halt, says Olarn Chaipravaat, former chairman of Siam Commercial Bank. "My assumption is that the lending mechanism has broken down," he told a local newspaper on Monday.

On the political front, Kriengsak Chareonwongsak, head of the Institute for Future Studies for Development, said there was a grave risk the steps taken by the Chuan government to repair the economy could be undone if different oliticians come to power in the next election.

"Any new government may put things on hold and even reverse policies. That will be a major political risk," hesaid.