Thai Fundamentals

[Buff-horns]

Thai PM Says Economy "Very Good" Despite "Storms"

2005-12-04

BBC Monitoring Asia Pacific

Text of report in English by Thai newspaper Bangkok Post website on 4 December

Prime Minister Thaksin Shinawatra yesterday insisted that the economy was going strong despite a series of storms that it has had to weather throughout the year.

His assurances were aimed at dispelling growing concerns that the country is strapped for cash.

The cabinet recently approved an 80bn-baht increase to the issue limit of treasury bills to boost flexibility in cash management.

The government's habit of lavish spending to fulfil populist policies was also viewed as a reason behind the extended credit line.

Speaking on his weekly radio programme, Mr Thaksin said the government had 50,200m dollars in its coffers against dwindling debts of 50,000m dollars.

On the day he took office as prime minister in 2001, the state coffers shrunk to 32,000-33,000m dollars while debts soared to 70,000m dollars, he said.

"Our economy is considered very good despite the fact that we have had to weather so many storms this year, such as bird flu, the tsunami, the southern violence, high oil prices, drought and so on," said Mr Thaksin.

He also voiced confidence that this year's economic growth would not be below 4.5 per cent, rejecting the Fiscal Policy Office's revised projection of 4.3 per cent from an earlier estimate of 4.6 per cent expansion.

Mr Thaksin said the government would proceed with economic restructuring which proved successful and that he would never allow the economy to crash as long as he remained in the premiership.

"We examine every figure and every indicator. What's bad we improve, what is good, we maintain," he said.

He also said the government would carry on with its anti-poverty policy, adding that he did not mind hard work if it would help people survive.

Finance Minister Thanong Bidaya yesterday criticized the Fiscal Policy Office for revising down the growth projection, saying the agency got "over-excited".

The revised figure was in response to slower export growth in recent months.

"I disagree with the office for lowering the projection simply because of the latest export numbers. It got over-excited and took everything at face value. It didn't look deep enough at the fundamentals of the economy," he said. Mr Thanong offered to buy the director of the Fiscal Policy Office dinner if he was wrong, as he put the economic growth projection for this year at over 4.5 per cent.

He expressed confidence that the privatization of Egat Plc would not be disrupted by the movement opposed to it, saying he believed most people were not opposed to the scheme.

"I believe they understand that it [privatization] would reduce state burdens while increasing efficiency. But we have to make the process transparent and accountable," he said.

Speaking at the Thai Investors' Day forum, he also took to task Stock Exchange of Thailand executives and related parties for causing the price-to-earnings (P/E) ratio to be low.

e said Thailand's economy was stronger than that of neighbouring countries but its P/E ratio was too low in comparison to those countries.

And he said the Finance Ministry would draw more institutional investors, hoping to push up their number. They currently account for only 30 per cent of all investments.