Mishandled Economy ?

[bambob]

FINANCIAL CRISIS: Govt ‘has mishandled economy’

Published on July 10, 2005

Rising public debt, inflation to savage populace: Abhisit

Opposition Leader Abhisit Vejjajiva yesterday predicted the country’s grass-roots population would likely face a severe economic crisis in the next two or three years if the government continued its current policies.

“Unlike the 1997 crisis, we’re now facing double threats on the economic front. On the one hand, economic growth is slowing down. On the other, the trade and current account deficits are widening amid rising inflation,” he told a seminar on the 2005-06 Thai economic outlook organised by King Mongkut Thonburi Technology University.

Abhisit said the grass-roots people, who represent the majority of the country’s population, would be severely hit by rising debts, high inflation and high prices for essential goods and services in the next few years if economic policies are not changed.

The opposition leader also said Prime Minister Thaksin Shinawatra’s “diabetic treatment” theory would not work under current economic conditions.

Earlier, Thaksin said the government would continue to stimulate economic growth as a means to solve the current problems of high oil prices, rising inflation and widening trade and current account deficits.

Thaksin drew an analogy to the treatment of diabetics, saying the patient would be worse off without proper feeding.

On the other hand, Abhisit said the country’s current economic problems are supply-side, so it is not possible to solve the problems with demand-side management as suggested by the premier.

The government has mismanaged the economy, he said, citing the oil price policy as an example.

“They’ve tried to speculate on the world oil price trend and hurt themselves this time. Prior to last year, the government was so confident that it could predict prices correctly, so it went on subsidising domestic prices as the means to solve the oil problem,” he said.

“The situation proved the government was wrong in believing high oil prices would be just temporary. The consequence is the Oil Fund is now heavily indebted from an extended period of subsidies. Public debts are now more than Bt90 billion. That’s not a small amount as it could be used to build another international airport.”

Asked what he would do to solve the problems if he was prime minister, Abhisit said the first priority would be to free oil prices, reduce oil taxes and secure funds to pay back the Oil Fund’s debts.

All these measures would decrease the public’s future financial burden and remove economic uncertainties. Meanwhile, Thaksin said he would announce new measures to solve economic woes on Tuesday.

source:nationmultimedia.com