Bangkok--Jun 28--SET
Dr. Chaiyawat Wibulswasdi, Advisor to the Deputy Prime Minister and Finance Minister, spoke during the press conference at “Thailand Focus 2005-Strategists” organized by the Federation of Thai Capital Market Organizations (FeTCO), which got underway this morning (June 27, 2005) and focused on discussions and exchanges of ideas amongst more than 60 well-known economists, strategists, foreign stock analysts and representatives from FETCO as well as Thai securities analysts and members of the Foreign Brokers Club in Thailand. The discussions centered on the tabled topic of “Thailand’s Fiscal Policy and its Readiness for Investment in the Country’s Basic Infrastructure”. Attendees heard, during the first part of the session, a presentation of the big picture of the direction the Thai economy is currently headed in, noting that the Thai economy is currently affected by supply problems, including water and oil. In response to these challenges, the government’s current fiscal policy emphasizes supply management to handle all situations effectively and with sustainable growth in mind.
Dr. Chaiyawat noted, “In the long term, we believe Thailand will be able to achieve annual economic growth between 5 — 6%. The government will lay down 3 economic development frameworks to help maintain this appropriate growth rate while promoting fiscal sustainability. These three frameworks are:
1) Fiscal sustainability, which aims to create a balanced budget, reducing public and foreign debt while lowering dependence on external funds. The sustainability of Thailand’s financial position can be seen in the country’s foreign reserves, which stand at 3.8 times its short-term foreign debts, as well as in Thailand’s 2 credit rating upgrades over the past 2 years.
2) Mega-projects, which are aimed at developing several infrastructure projects in Thailand without affecting the country’s fiscal position. The government plans to invest THB1.7 trillion (approx. USD42.5 bln.) during the next 5 years (2005-2010) on energy projects, transportation systems, residential projects, education and information technology. The sources for the capital needed for these projects will come from the government’s budget (39%), domestic loans (24%), overseas loans (18%) and the accumulated revenues from various state enterprises. The government’s expenditures on mega-projects will average 29% of its total budget in 2005-2006.
3) A balanced current account, in which the government aims to maintain the country’s current account deficit at between 2-3% of Thailand’s gross domestic product (GDP). This way, Thailand can manage to maintain its fiscal sustainability while its investments in mega-projects continue. These current account deficit estimates have been agreed with by foreign investors who participated in the event,” said Dr. Chaiyawat.
Other issues that the foreign economists and analysts expressed interest in included Thailand’s ability to make timely budget disbursements and its fiscal ability to carry out all investments in mega-projects as planned. Dr. Chaiyawat also reported that economic-related agencies present at the conference to provide information included the Fiscal Policy Research Institute Foundation, Fiscal Policy Office, State Enterprise Policy Office, Public Debt Management Office, and the Office of the National Economic and Social Development Board. These offices helped convince the foreign economists and analysts that Thailand has been pursuing all its policies with prudence and flexibility to adapt to changes. A number of committees have been established to follow up, evaluate and consider any adjustments required to the large investments to better mirror existing economic conditions. For example, if any projects appear to have become too heavily dependent upon import-content, they may be re-prioritized in order to avoid any undesirable impacts on the overall economy.
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