Abhisit Fears Huge Public Debt By 2013

[lannarebirth]

When you look around you and consider the joke welfare system, it's difficult to believe that Thailand is on the edge of a public debt problem. Where did the money go? Maybe the west is mired in debt but it at least has a lot to show for it. In order for the Thai economy to prosper there needs to be significant domestic investment, of the sort that can only be provided by the Government. It's not a case of avoiding debt, so much as will the money get spent wisely: I doubt it.

Thailand doesn't have a public debt problem ... yet.

Not sure what the value of loans underwritten by the Thaksin government to farmers through independent banks is but it could put that statement out of kilter

Correct. A lot of the debt piling up is "off balance sheet" debt.

[mommysboy]

When you look around you and consider the joke welfare system, it's difficult to believe that Thailand is on the edge of a public debt problem. Where did the money go? Maybe the west is mired in debt but it at least has a lot to show for it. In order for the Thai economy to prosper there needs to be significant domestic investment, of the sort that can only be provided by the Government. It's not a case of avoiding debt, so much as will the money get spent wisely: I doubt it.

Thailand doesn't have a public debt problem ... yet.

phew!! lucky I didn't write that it did then! : reread.

[PaulBax]

They could start by cutting the military budget by 75% and selling off all of its tv and radio stations!

The military only fights Thai people so it is not needed to defend the nation!

[lovetotravel]

When you look around you and consider the joke welfare system, it's difficult to believe that Thailand is on the edge of a public debt problem. Where did the money go? Maybe the west is mired in debt but it at least has a lot to show for it. In order for the Thai economy to prosper there needs to be significant domestic investment, of the sort that can only be provided by the Government. It's not a case of avoiding debt, so much as will the money get spent wisely: I doubt it.

Thailand doesn't have a public debt problem ... yet.

Just read this today. 60 billion baht/year in interest on debts from the 1997 financial crisis:

http://www.nationmultimedia.com/business/High-inflation-seen-from-money-printing-to-settle--30166922.html

</h1>

<h1>High inflation seen from money printing to settle FIDF debt: Teerana

WICHIT CHAITRONG

THE NATION October 6, 2011 3:02 am

Consumers would be hit hard by what could be termed "inflation tax" if the government were to force the Bank of Thailand to print money to pay off the huge debt overhang from the 1997 financial crisis, a leading economist warned yesterday.

"Monetisation, the printing of money to repay debts, would lead to high inflation and ordinary people would suffer from 'inflation tax' - a rise in goods prices," said Teerana Bhongmakapat, professor of economics and dean of Chulalongkorn University's economics faculty.

"If the central bank agreed to repay the debt of Bt1.1 trillion owed by the Financial Institutions Development Fund [FIDF] over 10 years, inflation would roughly rise by an extra 1 percentage point annually," he said, referring to Finance Minister Thirachai Phuvanatnaranubala's attempt to transfer FIDF debts back to the BOT.

[connor6063]

Thailand's tourism rates are going to have to go sky high to support this....

[mommysboy]

Thailand's tourism rates are going to have to go sky high to support this....

The tourism sector is not a main driver of the Thai economy; so it is said anyway!!

The 2 main sectors are manufacturing and agriculture, the latter providing a great deal of employment also.

With the world economy faltering and domestic consumption down then growth rates are unlikely to be nearly enough to service the debt it already has, and now it seems there will have to be a great deal more.

Austerity? Forget that not exactly a big spender when it comes to domestic investment, and if the cheque book doesn't come out there will be problems with civil unrest.

Bit of a conundrum then!

I guess it is not just possible to take its much vaunted reserves, cash them in and spend on an inward investment programme thus bolstering the economy and really helping people. This would help to devalue the baht too, and provide a boost to exports.

[Buchholz]

The "perceived problem" is that the current government are planning to spend more money than they have, and a lot of that will be spent on handouts and schemes that will be rife with corruption. They are also expecting revenue based on incorrect assumptions - growth this year of 3.5-4% when the BOT have said 2.6% or less, and next year of 4.5-5.5% which given the damage of the floods and the global economy is unlikely to get that high.

More slashing of the GDP forecast... coupled with persistent inflation

Flood crisis likely to slash 2011 GDP to 1.5%: NESDB

BANGKOK, Nov 21 - Thailand's flood crisis is likely to slash 2011 gross domestic product (GDP) to only 1.5 per cent, even further from the previous forecast of 3.5-4 per cent, according to the Office of the National Economic and Social Development Board (NESDB).

NESDB Secretary-General Akom Termpittayapaisit said the ongoing flood, which began in October, is likely to continue until December, causing damage of Bt200-300 billion and affecting this year's GDP by 2.3 per cent.

NESDB projected next year's inflation rate will stand at 3.5 - 4.0 per cent, with household consumption expanding 4.4 per cent, investment 10.3 per cent, while the economic drive for higher household incomes would include the daily minimum wage raise to Bt300/day, the salary adjustment of newly graduates at Bt15,000/month, and the rice mortgage scheme.

-- TNA 2011-11-21

Edited November 22, 2011 by Buchholz

[Buchholz]

The "perceived problem" is that the current government are planning to spend more money than they have, and a lot of that will be spent on handouts and schemes that will be rife with corruption. They are also expecting revenue based on incorrect assumptions - growth this year of 3.5-4% when the BOT have said 2.6% or less, and next year of 4.5-5.5% which given the damage of the floods and the global economy is unlikely to get that high.

More slashing of the GDP forecast... coupled with persistent inflation

Flood crisis likely to slash 2011 GDP to 1.5%: NESDB

BANGKOK, Nov 21 - Thailand's flood crisis is likely to slash 2011 gross domestic product (GDP) to only 1.5 per cent, even further from the previous forecast of 3.5-4 per cent, according to the Office of the National Economic and Social Development Board (NESDB).

NESDB Secretary-General Akom Termpittayapaisit said the ongoing flood, which began in October, is likely to continue until December, causing damage of Bt200-300 billion and affecting this year's GDP by 2.3 per cent.

NESDB projected next year's inflation rate will stand at 3.5 - 4.0 per cent, with household consumption expanding 4.4 per cent, investment 10.3 per cent, while the economic drive for higher household incomes would include the daily minimum wage raise to Bt300/day, the salary adjustment of newly graduates at Bt15,000/month, and the rice mortgage scheme.

-- TNA 2011-11-21

In related news, the Public Debt Management Office today reported that public debt as a percentage of the GDP has risen to 41.66% as of Sept. 30.

Public debt had increased by 176.75 Billion Baht from August and now stood at 4.44 Trillion Baht.

.

Edited December 6, 2011 by Buchholz

[hammered]

And Abhisit's government borrowed a huge amount of money and saddled incoming goevrnments with it for some time to come.

[pauljones]

Wasn't there a 200 billion surplus a few years ago before the army/democrats took over?

[hammered]

Iirc estimates were that becaus eo fthe Abhisit governments populist policies debt would reach 600 billion baht in 2012. Niow if you add a bit of flood money and the elected governments desire to carry out policies peopel elected it for....

[Buchholz]

Wasn't there a 200 billion surplus a few years ago before the army/democrats took over?

No

[whybother]

Iirc estimates were that becaus eo fthe Abhisit governments populist policies debt would reach 600 billion baht in 2012. Niow if you add a bit of flood money and the elected governments desire to carry out policies peopel elected it for....

Do you mean "iirs"? (if I remember selectively).

[tukkytuktuk]

The whole world seems to be in recession at the moment so I think Thailand shouldn't worry to much. Look at the positive, now the floods are receeding things can only get better. One thing that has improved is the spirits of Thai people and now there back in high spirits anything is possible. Remember together we can achieve anything, divided we fall.

[pauljones]

Wasn't there a 200 billion surplus a few years ago before the army/democrats took over?

No

Yes.

The Gov was running in debt when Thaksin came in I recall.

By 2003, Thailand had the worlds best performing stock market. Unemployment was at all time lows.

In 2003-2004-2005, Thailand generated hundreds of billions in budget surplusses...then the Army took over and more than doubled it's own spending.

[Buchholz]

Wasn't there a 200 billion surplus a few years ago before the army/democrats took over?

No

Yes.

Sources and Links... which would have been best provided with your first post.

.

Edited December 7, 2011 by Buchholz

[whybother]

Wasn't there a 200 billion surplus a few years ago before the army/democrats took over?

No

Yes.

The Gov was running in debt when Thaksin came in I recall.

By 2003, Thailand had the worlds best performing stock market. Unemployment was at all time lows.

In 2003-2004-2005, Thailand generated hundreds of billions in budget surplusses...then the Army took over and more than doubled it's own spending.

Timing is wonderful.

Come in when the country is recovering from the Asian financial crisis. Run the country during a booming worldwide economy. Have the opposition take over when there is a Global financial crisis.

And then play yourself up as the Country's saviour.

[moe666]

Wasn't there a 200 billion surplus a few years ago before the army/democrats took over?

No

Yes.

The Gov was running in debt when Thaksin came in I recall.

By 2003, Thailand had the worlds best performing stock market. Unemployment was at all time lows.

In 2003-2004-2005, Thailand generated hundreds of billions in budget surplusses...then the Army took over and more than doubled it's own spending.

Timing is wonderful.

Come in when the country is recovering from the Asian financial crisis. Run the country during a booming worldwide economy. Have the opposition take over when there is a Global financial crisis.

And then play yourself up as the Country's saviour.

Just have one of your minions on TV to do it for you

[lovetotravel]

Timing is wonderful.

Come in when the country is recovering from the Asian financial crisis. Run the country during a booming worldwide economy. Have the opposition take over when there is a Global financial crisis.

And then play yourself up as the Country's saviour.

For most countries, the same thing has happened. Life in general, globally, was pretty good before the financial crisis. Tough times now. It will be very interesting to see how this plays out.

[Buchholz]

November Consumer Confidence Index Lowest in 10 Years

UPDATE : 9 December 2011

The flood crisis caused a steep drop in the November consumer confidence index to the lowest level in a decade.

The Thai Chamber of Commerce Economic and Business Forecasting Center reported that the consumer confidence indices for the month of November have all declined.

The overall index was at 61, the lowest in 122 months, since September 2001.

The index for future employment opportunities was recorded at 62.5, the lowest in 119 months, since January 2002.

The index for future earnings came in at 89.5, the lowest in 28 months, and the first decline below the 100 level in four months.

The Director of the Center Thanawat Polvichai said the main issue affecting the indices is the flood crisis, which caused extensive damage to a wide area, including to several industrial estates, assets, and state offices.

The crisis led many agencies to cut its GDP growth forecast for this year to less than 2 percent from an earlier estimate of 3 percent growth.

http://www.thailandoutlook.tv/tan/ViewData.aspx?DataID=1050570

[phiphidon]

Wasn't there a 200 billion surplus a few years ago before the army/democrats took over?

No

Yes.

The Gov was running in debt when Thaksin came in I recall.

By 2003, Thailand had the worlds best performing stock market. Unemployment was at all time lows.

In 2003-2004-2005, Thailand generated hundreds of billions in budget surplusses...then the Army took over and more than doubled it's own spending.

Timing is wonderful.

Come in when the country is recovering from the Asian financial crisis. Run the country during a booming worldwide economy. Have the opposition take over when there is a Global financial crisis.

And then play yourself up as the Country's saviour.

So is it Yes or is it No? Who is right Buchholz or PaulJones?

By the way, I don't think they had much say on having the "opposition" taking over, did they?

[whybother]

Timing is wonderful.

Come in when the country is recovering from the Asian financial crisis. Run the country during a booming worldwide economy. Have the opposition take over when there is a Global financial crisis.

And then play yourself up as the Country's saviour.

So is it Yes or is it No? Who is right Buchholz or PaulJones?

By the way, I don't think they had much say on having the "opposition" taking over, did they?

I don't know, but Thailand was coming out of the Asian Financial crisis when Thaksin came to power, so there was probably a debt, and then Thaksin was in power during a booming global economy, so there might have been a budget surplus at the end of his tenure.

My point is, when the standard "things were better under Thaksin" is trotted out, people ignore the effects of the global economy while he was PM.

Regardless of whether Thaksin's proxies had a choice of when the Democrats took over, the fact is the Democrats brought Thailand through the GFC in relatively healthy shape.

[jimbeam1]

Thailand's tourism rates are going to have to go sky high to support this....

The tourism sector is not a main driver of the Thai economy; so it is said anyway!!

The 2 main sectors are manufacturing and agriculture, the latter providing a great deal of employment also.

With the world economy faltering and domestic consumption down then growth rates are unlikely to be nearly enough to service the debt it already has, and now it seems there will have to be a great deal more.

Austerity? Forget that not exactly a big spender when it comes to domestic investment, and if the cheque book doesn't come out there will be problems with civil unrest.

Bit of a conundrum then!

I guess it is not just possible to take its much vaunted reserves, cash them in and spend on an inward investment programme thus bolstering the economy and really helping people. This would help to devalue the baht too, and provide a boost to exports.

(I guess it is not just possible to take its much vaunted reserves, cash them in and spend on an inward investment programme thus bolstering the economy and really helping people. This would help to devalue the baht too, and provide a boost to exports.)

That sounds far to sensible to happen? Just Imagine, especially a woman, selling all that Gold.

jb1

[phiphidon]

Timing is wonderful.

Come in when the country is recovering from the Asian financial crisis. Run the country during a booming worldwide economy. Have the opposition take over when there is a Global financial crisis.

And then play yourself up as the Country's saviour.

So is it Yes or is it No? Who is right Buchholz or PaulJones?

By the way, I don't think they had much say on having the "opposition" taking over, did they?

I don't know, but Thailand was coming out of the Asian Financial crisis when Thaksin came to power, so there was probably a debt, and then Thaksin was in power during a booming global economy, so there might have been a budget surplus at the end of his tenure.

My point is, when the standard "things were better under Thaksin" is trotted out, people ignore the effects of the global economy while he was PM.

Regardless of whether Thaksin's proxies had a choice of when the Democrats took over, the fact is the Democrats brought Thailand through the GFC in relatively healthy shape.

These four articles makes the "fear of huge public debt" debate interesting in its historic context. Somehow think we've been here before........

http://asiancorrespo...dget-surpluses/

http://asiancorrespondent.com/30180/did-thaksin-bankrupt-thailand-through-borrowing/

http://asiancorrespondent.com/50378/has-public-debt-really-reduced-under-the-abhisit-government/

http://asiancorrespo...-thailand-debt/

[whybother]

These four articles makes the "fear of huge public debt" debate interesting in its historic context. Somehow think we've been here before........

http://asiancorrespo...dget-surpluses/

http://asiancorrespondent.com/30180/did-thaksin-bankrupt-thailand-through-borrowing/

http://asiancorrespondent.com/50378/has-public-debt-really-reduced-under-the-abhisit-government/

http://asiancorrespo...-thailand-debt/

Fixed links

http://asiancorrespondent.com/50378/has-public-debt-really-reduced-under-the-abhisit-government/

http://asiancorrespondent.com/59663/stoking-fear-thailand-debt/

And an additional link: http://asiancorrespondent.com/65473/thailands-spiralling-public-debt/

Edited December 9, 2011 by whybother

[OzMick]

particularly the rice-pledging project," Abhisit said

Guess the Reds got that one sealed tight - difficult to get Yellow snouts in there.

In its last incarnation, 37% of the total outlay found its way to rice farmers and because of the way it was structured, mostly to those better off. the rest went to rice barons and millers, to fraud, bribes, kickbacks and simple theft. It was widely denounced as a Thaksin designed scam.

But you're right, it would be difficult for a yellow shirt to get any of the graft intended for PTP supporters only.

[OzMick]

Why didn't he do something about the perceived problem when he was in power. This he should have been working on with the Governor of Bangkok. Abhisit is playing ducks and drakes to deflect from the responsibility as a leader he had. Bangkok and surrounding areas are the manufacturing hub of Thailand and hence not need, but demand the leader of the country prepares for a disaster like this. Its very hard to put a plan in place at the height of a major catastrophe when you have done little about it.

Abhisit and the Governor of Bangkok have a lot to answer for.

Doesn't anyone of these reporters analysis the problem or the comment and then investigate why something may be being said. And it doesn't help when there are so many gullible people out there that cannot think past the last 5 minutes.

The "perceived problem" is that the current government are planning to spend more money than they have, and a lot of that will be spent on handouts and schemes that will be rife with corruption. They are also expecting revenue based on incorrect assumptions - growth this year of 3.5-4% when the BOT have said 2.6% or less, and next year of 4.5-5.5% which given the damage of the floods and the global economy is unlikely to get that high.

What does the Governor of Bangkok have to do with any of this? It's a national issue.

And what does Abhisit have to answer for? He managed to get Thailand through the GFC leaving the country in a very healthy position.

Abhisit is the most acceptable politician in Thailand from a western point of view but he is leader of a party that will never be able to win the kind of majority that the present government has. If he really wishes for Thailand to become an open democracy that is representative of all of the people, he needs to be seen as not from a party which can never be in government because the people consider it to be opposed to their interests and aspirations and show the electorate (however uneducated, naive and venal the posters here think of them) that there is another way.

As things stand, there is an inevitability that in elections the party associated with Thaksin will win most seats (whether as a result of ignorance, vote-buying, intimidation or whatever is irrelevant) and the Democrats will be a poor second.

Thailand is an emerging democracy with the historical tradition of accepting that corruption will be the norm in business and in dealings with bureaucracy; changing this acceptance may seem the first step to a bettter society but which political party in Thailand is ready to challenge the age-old tradition? Abhisit might want to, but would his party support that? And he would also need to be in power - an unlikely scenario.Nor does he seem likely to found a new party dedicated to egalitarianism and open government

Personally I do not believe that bringing Thaksin back will make the country any worse - he is not in any position of power in the government and has charges hanging over his head that can be activated at any time if he were to step out of line..

What Thaksin has done is awaken a sleeping giant in the Red movement and it is my opinion that therein lies the threat to powers that have always regarded the kingdom as theirs to do with what they will. I believe that within that disparate grouping there are people with a completely different agenda from Thaksin's. Which of those groupings wins the internal struggle for power will be the decider on Thailand's future.

Whatever befalls I will be here with my Thai family, perhaps shaking my head but accepting that the will of the Thai people if it is their decision (and not imposed by an external force) must be paramount

They have certainly wakened a sleeping giant, by promising the many thousands working in an uneconomic industry that their income will be subsidised as well as various other tax-expensive populist promises. To hold onto government, the vote-buying bribes will have to increased each election and once reserves are spent a spiral of increasing debt starts - quite soon in fact.

The external force that looms may not be that which you intended to imply. When the economic fool's paradise collapses, IMF and other external agencies will be needed, and you can bet a tresticle that the rice subsidies will be the first thing to go.

[Buchholz]

November Consumer Confidence Index Lowest in 10 Years

The overall index was at 61, the lowest in 122 months, since September 2001.

The index for future employment opportunities was recorded at 62.5, the lowest in 119 months, since January 2002.

The index for future earnings came in at 89.5, the lowest in 28 months

Impressive performance of the Yingluck administration.

.

[phiphidon]

These four articles makes the "fear of huge public debt" debate interesting in its historic context. Somehow think we've been here before........

http://asiancorrespo...dget-surpluses/

http://asiancorrespondent.com/30180/did-thaksin-bankrupt-thailand-through-borrowing/

http://asiancorrespondent.com/50378/has-public-debt-really-reduced-under-the-abhisit-government/

http://asiancorrespo...-thailand-debt/

Fixed links

http://asiancorrespo...sit-government/

http://asiancorrespo...-thailand-debt/

And an additional link: http://asiancorrespo...ng-public-debt/

Thanks for that but they seemed to work when posted. Anyway seems that Thailand is a way off from a huge public debt despite what Khun Abhisit thinks.

[pastitche]

November Consumer Confidence Index Lowest in 10 Years

The overall index was at 61, the lowest in 122 months, since September 2001.

The index for future employment opportunities was recorded at 62.5, the lowest in 119 months, since January 2002.

The index for future earnings came in at 89.5, the lowest in 28 months

Impressive performance of the Yingluck administration.

.

These figures can hardly be surprising considering the flooding disaster that the country has experienced and therefore are hardly attributable to the present administration, given its time in office. You can argue (perhaps with some justification) that they might have done better in dealing with the floods but you cannot argue that a solution existed that would have saved the country from the devastation that was caused; had such a solution been available would it not have screamed from the rooftops by he Democrats?