Finance Minister Kittiratt Pushes Rating Upgrade: Thailand

[webfact]

Kittiratt pushes rating upgrade

Nakarin Srilert,

Suphanee Pootpisut

The Nation

Kittiratt

Infrastructure investment key, Moody's assured

BANGKOK: -- Finance Minister Kittiratt Na-Ranong placed the biggest bet on the Bt2.27-trillion infrastructure investment plan when trying to convince Moody's Investors Service that Thailand should win an upgrade in its sovereign credit rating.

In a meeting with Moody's analysts who are in Bangkok as part of the company's annual review of the Kingdom's sovereign rating, he said the investment as well as policies to rebalance the economy and political stability would brighten the country's long-term outlook.

"Moody's review is not focused on current affairs, but forward-looking aspects. The infrastructure investment is a long-term policy, as it would be legally binding for this and subsequent governments. This should convince rating agencies of the long-term bright prospects of the Thai economy," said Kittiratt, who is also a deputy prime minister.

At a seminar on the Asean Economic Community hosted by TV Channel 3, he said the draft bill for the seven-year investment plan should be submitted for the Cabinet's approval this month, or by February at the latest.

The government tentatively plans to provide 8 per cent of the needed funds through revenue of involved state enterprises, 69 per cent through borrowing by government and state enterprises, 9 per cent through annual fiscal budgets, and 14 per cent through public-private investment.

Of the total budget of Bt2.2 trillion, 64 per cent will fund 31 rail-related projects, 24 per cent will go to 13 road projects, 7 per cent to seven water-transport projects, and 4.75 per cent to four air-transport projects.

He said the borrowing, to be approved on an annual basis like conventional budgets, would ensure smooth execution and allow Thailand to achieve a balanced budget in 2016. The government plans to reduce the 2014 budget deficit to 3 per cent of gross domestic product, from 4 per cent this year. The deficit will then be cut to 2 per cent of GDP in 2015.

"The investment is to make Thailand the Asean centre for trade and investment," he told the audience.

To Moody's analysts, Kittiratt said the country was rebalancing the economy by trying to reduce reliance on export and boost domestic consumption through several measures such as the rise in the daily minimum wage to Bt300 nationwide, which would consequently boost economic growth.

The analysts met with Kittiratt yesterday. He also told the rating agency that the government had pushed for massive investment on infrastructure mega-projects, which would contribute to long-term economic growth.

He told Moody's that the government of Prime Minister Yingluck Shinawatra enjoyed political stability and was ready to go ahead at full steam to move the country forward and implement all policies. The situation is different from 2006 when the military staged a coup d'etat and the country lacked political stability.

He said groups of people with starkly different political stances had expressed ideas and treated one another on a softer basis, resorting more to the parliamentary process to solve political tensions. This suggests that renewed political strife is less likely to erupt.

Thailand's rating is now "Baa1".

Meanwhile, Moody's said in the just-released "Asia-Pacific Sovereign Outlook 2013: Resilient to Global Headwinds" that sovereign credit fundamentals in the Asia-Pacific region should remain resilient to both global headwinds during 2013 and the persistence of extraordinary easing by the US Federal Reserve. Although growth in the region is expected to remain flat at 5 per cent, it will continue to grow faster than any other region. While China's growth has moderated, it should remain relatively robust in the near term.

"Importantly, banking systems in the Asia-Pacific are generally sound and well positioned to continue to support growth without posing significant contingent risks to their respective sovereigns. Financial soundness indicators, such as capital adequacy, liquidity [low loan-to-deposit ratios], and asset quality, are generally robust enough to withstand either a normalisation of interest rates, or a range of adverse economic shocks emanating from the global economy," it said in the report.

Moody's further expects growth in Asia and the Pacific to pick up only slightly over the near term, and remain below long-term averages in 2013 and 2014. This expectation is especially so with the large economies in the region. Notably, Moody's expects China's annual real GDP growth to remain at around 7.5 per cent and thus avoid a hard landing - although below the past decade's average of 10 per cent.

For 2012 and 2013, Moody's expects the region's GDP-weighted average current-account surplus to hover around 1 per cent of GDP after having peaked at 5 per cent in 2007. As a result of this projected lower current-account surplus, the growth of aggregated international reserves in the region, which amounted to roughly US$6.5 trillion (Bt197 trillion) as of September 2012, will slow further.

Nevertheless, the Asia-Pacific region will maintain its top position in terms of total reserves, which are projected at $7 trillion by the end of this year.

Nevertheless, rising geopolitical tensions over the past year have emerged over maritime territorial disputes and will have significant economic ramifications if not constructively managed. Elections over the next year may also impact the outlook for reform in several countries.

-- The Nation 2013-01-15

[bigbamboo]

Would you trust anything this man says?

No....... nor would I. And more importantly nor will the ratings agencies.

[geriatrickid]

Would you trust anything this man says?

No....... nor would I. And more importantly nor will the ratings agencies.

Ahh, but would you trust the ratings agencies? They don't have the most reliable track records.

[waza]

I didnt realise that Thailands credit rating was so low...........

Thailand's rating is now "Baa1".

[waza]

"At the BBB+ level, it [net general government debt] is not high. It is essentially lower than most of the other sovereign BBB+ category," Tan said.

However, the prolonged political uncertainties in the past two years have prevented Thai governments from pursuing necessary infrastructure investment for Thailand's long-term growth.

Last year's devastating floods have made Thailand less attractive in the eyes of foreign investors that fear that another round of floods............Another concern lies in the government's policies promised during last year's election - such as the rice-pledging scheme and daily minimum wage increases to Bt300 in three years - which have constrained the government's budget and could hammer Thai businesses particularly smaller ones.............All these will be negative for the ratings because you may increase deficits, you may increase debts over the medium term. That would erode one of |the strengths, Thailand's credit strength," Tan said. ttp://www.nationmultimedia.com/business/Political-uncertainty-affecting-Thailands-credit-r-30177694.html

On one hand the PTP government is begging for a Credit rating upgrade while the other hand is implementing policies that will drag that rating down.

[AleG]

I didnt realise that Thailands credit rating was so low...........

Thailand's rating is now "Baa1".

Crazy, isn't it?

[geriatrickid]

I didnt realise that Thailands credit rating was so low...........

Thailand's rating is now "Baa1".

It's not that impressive until one looks at other sovereign ratings. Keep in mind that S&P gives a BBB+ and Fitch is BBB.

The rating agencies charge one heck of a fee for their rating though.

Personally, I have found Fitch to be more reliable.

S&P gives some countries lower ratings. For example Russia is BBB, Spain BBB-, Italy and Ireland are BBB+

[webfact]

Thai finance ministry set to seek Bt2 trillion loan

By English News

BANGKOK, Jan 15 – The cabinet will be asked to approve a Bt2 trillion loan to develop mega projects on infrastructure to uplift Thailand as the communication hub of Southeast Asia, the finance minister said.

Deputy Prime Minister/Finance Minister Kittiratt Na-Ranong said the loan will enable the government to go ahead with its development of rail system, high-speed train and motorways without touching the national budget.

The world should be aware that Thailand’s budget deficit is not an obstacle to its infrastructure development, he said, adding that a draft bill seeking the loan will be tabled to the cabinet together with details of investment and fund generating plans. After that the bill will be forwarded to Parliament for deliberations and approval.

He said the budget deficit of Bt400 billion reached in 2012 will be gradually reduced to Bt300 billion in 2013 and Bt200 billion in 2014 until it reaches a balance in the next few years.

On Thursday’s visit to Thailand by Japanese Prime Minister Shinzo Abe, Mr Kittiratt said the government will discuss several economic issues including Japan's interest to invest in a rail system to meet with a planned high-speed train service on several routes: Bangkok-Chiang Mai, Bangkok-Nong Khai, Bangkok-Rayong and Bangkok-South. (MCOT online news)

-- TNA 2013-01-15

[Thai at Heart]

Thai finance ministry set to seek Bt2 trillion loan

By English News

BANGKOK, Jan 15 – The cabinet will be asked to approve a Bt2 trillion loan to develop mega projects on infrastructure to uplift Thailand as the communication hub of Southeast Asia, the finance minister said.

Deputy Prime Minister/Finance Minister Kittiratt Na-Ranong said the loan will enable the government to go ahead with its development of rail system, high-speed train and motorways without touching the national budget.

The world should be aware that Thailand’s budget deficit is not an obstacle to its infrastructure development, he said, adding that a draft bill seeking the loan will be tabled to the cabinet together with details of investment and fund generating plans. After that the bill will be forwarded to Parliament for deliberations and approval.

He said the budget deficit of Bt400 billion reached in 2012 will be gradually reduced to Bt300 billion in 2013 and Bt200 billion in 2014 until it reaches a balance in the next few years.

On Thursday’s visit to Thailand by Japanese Prime Minister Shinzo Abe, Mr Kittiratt said the government will discuss several economic issues including Japan's interest to invest in a rail system to meet with a planned high-speed train service on several routes: Bangkok-Chiang Mai, Bangkok-Nong Khai, Bangkok-Rayong and Bangkok-South. (MCOT online news)

-- TNA 2013-01-15

They are going to use Japanese money to buy Chinese trains? My how times change.

[TheGhostWithin]

"Moody's review is not focused on current affairs, but forward-looking aspects."

- Thailand just lost its' rating as the number 1 rice exporter. Unless prices increased by the same percentage of sales decreased, Thailand has lost out financially on this, and the long term picture is not looking positive with its' competitors now holding top dog status and progressing whilst Thailands' rice industry is not.

- As the above states, a BT2 trillion loan is being taken out to finance infrastructure projects. Ratings agencies may question why some of their foreign currency reserves are not being used to finance this rather than a loan, even with global credit at historically low rates.

- The annual minimum wage increase has now kicked in and inflation is sure to follow. It has not yet kicked in, it will take at least 6 months - it is typically longer in slower growing western economies.

- Thailand has one of the slowest growth rates of South East Asia. If an economic shock from China were to occur, Thailand would have one of the thinnest cushions to sit on with regards to growth reduction before going into the black.

Just my take on why Thailand will not get a ratings upgrade at this point in time.

Edited January 15, 2013 by TheGhostWithin

[bigbamboo]

Would you trust anything this man says?

No....... nor would I. And more importantly nor will the ratings agencies.

Ahh, but would you trust the ratings agencies? They don't have the most reliable track records.

Be that as it may what the ratings agencies say and do still matters.

Nothing Kittirat says or does matters any more.

[billd766]

The government wants to borrow more money nad at the same time it is reducing the amount of tax revenue it earns.

In addition to this ANY money you borrow has to be paid back with interest somewhere down the line and the only people providing that money are the tax payers and the biggist are paying less tax than before.

Somehow this doesn't work for me but I am not an accountant.

[ballpoint]

He said groups of people with starkly different political stances had expressed ideas and treated one another on a softer basis, resorting more to the parliamentary process to solve political tensions.

So the reds/PTP are using the fact that they're no longer violently protesting as evidence the country is moving forward. "We've got what we want and the opposition are not resorting to the thuggery we did. All is well... ... until we no longer have what we want."

[Moruya]

Would you trust anything this man says?

No....... nor would I. And more importantly nor will the ratings agencies.

Ahh, but would you trust the ratings agencies? They don't have the most reliable track records.

Pooh pooh the messenger why not?

What examples are you using?

[waza]

"Deputy Prime Minister/Finance Minister Kittiratt Na-Ranong said the loan will enable the government to go ahead with its development of rail system, high-speed train and motorways without touching the national budget."

Then how does this debt get serviced, through advanced ticket purchases, toll booths? Or is it magical money that doesnt need to be repaid?

Edited January 15, 2013 by waza

[Thai at Heart]

"Deputy Prime Minister/Finance Minister Kittiratt Na-Ranong said the loan will enable the government to go ahead with its development of rail system, high-speed train and motorways without touching the national budget."

Then how does this debt get serviced, through advanced ticket purchases, toll booths? Or is it magical money that doesnt need to be repaid?

Well, that's as maybe, but traditionally these types of loans from Japan are at very low rates. The devil will be in the details. However, these soft loans normally go hand in hand with a comittment to buy Japanese capital goods, so how this reconciles with a plan to use them to buy Chinese trains, I am not quite sure.

[Moruya]

"Moody's review is not focused on current affairs, but forward-looking aspects. The infrastructure investment is a long-term policy, as it would be legally binding for this and subsequent governments. This should convince rating agencies of the long-term bright prospects of the Thai economy," said Kittiratt, who is also a deputy prime minister."

More deputies than the US sherrif's department.

"The government tentatively plans to provide 8 per cent of the needed funds through revenue of involved state enterprises, 69 per cent through borrowing by government and state enterprises, 9 per cent through annual fiscal budgets, and 14 per cent through public-private investment."

Mister "Little White Lie" brings you a 101%

"Of the total budget of Bt2.2 trillion, 64 per cent will fund 31 rail-related projects, 24 per cent will go to 13 road projects, 7 per cent to seven water-transport projects, and 4.75 per cent to four air-transport projects."

The other THB5.5M will evaporate

"The investment is to make Thailand the Asean centre for trade and investment," he told the audience."

Who went on to check that their wallets were still in their pockets

"To Moody's analysts, Kittiratt said the country was rebalancing the economy by trying to reduce reliance on export and boost domestic consumption through several measures such as the rise in the daily minimum wage to Bt300 nationwide, which would consequently boost economic growth."

Moodys analysts know a fallacy when they hear one! Eat your own rice boys and girls.

"He told Moody's that the government of Prime Minister Yingluck Shinawatra enjoyed political stability and was ready to go ahead at full steam to move the country forward and implement all policies. The situation is different from 2006 when the military staged a coup d'etat and the country lacked political stability."

So stable that members of their own government cry "coup" every 5 minutes

"He said groups of people with starkly different political stances had expressed ideas and treated one another on a softer basis, resorting more to the parliamentary process to solve political tensions. This suggests that renewed political strife is less likely to erupt."

Pitak who?

Edited January 15, 2013 by Moruya

[belg]

haha, an investment plan, what about first prove what it did for the economy in stead of begging for an ungrade of promisses...

30% of that money will line the pockets of corruption anyway, if not more

[Locationthailand]

And exactly how much of that will be applied to the construction? Thailand's spending is presently out of control. Is it not time to consolidate and account for what has already been lost?

[khunken]

Political strife has gone quiet until the next whitewash push and the temple findings. This is one of the least credible ministers in a cabinet of liars & thieves. Sorry to say the credit agencies are not much better ever since their huge clanger over the sub-prime crisis.

[philw]

Meanwhile, Thailand goes forwards, the PM's popularity rises, the economy strengthens, major long term infrastructure is being planned and implemented, the 300 minimum wage has not caused the economy to collapse, military tension with neighbouring countries is on the wane, Thai involvement with ASEAN is growing, BOI applications and approvals are high ( if not at record levels ), the military top brass seem to be cooperating with the Government and tourism is up.

This must hurt some on here.

[Asiantravel]

Meanwhile, Thailand goes forwards, the PM's popularity rises, the economy strengthens, major long term infrastructure is being planned and implemented, the 300 minimum wage has not caused the economy to collapse, military tension with neighbouring countries is on the wane, Thai involvement with ASEAN is growing, BOI applications and approvals are high ( if not at record levels ), the military top brass seem to be cooperating with the Government and tourism is up.

This must hurt some on here.

Is Thailand going blindly down the same path as Greece?

Debt servicing is something everybody always wants to forget, but cannot avoid. Today, Thailand, under the Financial Institutions Development Fund (FIDF), is carrying a debt burden of Bt1.4 trillion from the 1997 financial crisis. To date, the Bank of Thailand (BOT) has paid down Bt200,000 billion, (the agreement reached in 2002 between the BOT and Ministry of Finance (MOF) called for the BOT to pay Bt1.39 trillion over 30 years and the MOF to pay for the interest, but the BOT's commitment was never materialised. To date, the MOF has paid up Bt600,000 billion and the rest remains on the balance sheet. Rain or shine, the chickens come home to roost, and eventually the hard question to eschew will have to be dealt with. This FIDF issue will be the subject of much analysis and commentary following Tuesday's Cabinet decision to transfer the burden of the FIDF to the BOT, to wipe the slate clean so the government can borrow anew.

http://www.nationmul...r-30173553.html

Edited January 15, 2013 by Asiantravel

[waza]

Meanwhile, Thailand goes forwards, the PM's popularity rises, the economy strengthens, major long term infrastructure is being planned and implemented, the 300 minimum wage has not caused the economy to collapse, military tension with neighbouring countries is on the wane, Thai involvement with ASEAN is growing, BOI applications and approvals are high ( if not at record levels ), the military top brass seem to be cooperating with the Government and tourism is up.

This must hurt some on here.

and then you woke up

[Thait Spot]

Meanwhile, Thailand goes forwards, the PM's popularity rises, the economy strengthens, major long term infrastructure is being planned and implemented, the 300 minimum wage has not caused the economy to collapse, military tension with neighbouring countries is on the wane, Thai involvement with ASEAN is growing, BOI applications and approvals are high ( if not at record levels ), the military top brass seem to be cooperating with the Government and tourism is up.

This must hurt some on here.

Red underpants brigade?

Sent from my Nexus 7 using Thaivisa Connect Thailand mobile app

[philw]

Meanwhile, Thailand goes forwards, the PM's popularity rises, the economy strengthens, major long term infrastructure is being planned and implemented, the 300 minimum wage has not caused the economy to collapse, military tension with neighbouring countries is on the wane, Thai involvement with ASEAN is growing, BOI applications and approvals are high ( if not at record levels ), the military top brass seem to be cooperating with the Government and tourism is up.

This must hurt some on here.

and then you woke up

To what ??

Constant farang hyperbole, negativity and incessant criticism of things Thai ??

I'd rather have a hangover.

The country under current leadership is going forwards.

Deny it all you want but it's a fact.

Problems ahead for sure, but the trend is up.

[philw]

Meanwhile, Thailand goes forwards, the PM's popularity rises, the economy strengthens, major long term infrastructure is being planned and implemented, the 300 minimum wage has not caused the economy to collapse, military tension with neighbouring countries is on the wane, Thai involvement with ASEAN is growing, BOI applications and approvals are high ( if not at record levels ), the military top brass seem to be cooperating with the Government and tourism is up.

This must hurt some on here.

Red underpants brigade?

Sent from my Nexus 7 using Thaivisa Connect Thailand mobile app

Self delete my illconsidered reply to excessively stupid, but typical of Thai Visa, comment from previous poster.

Edited January 15, 2013 by philw

[rubl]

After somme ill-conceived and excessively less intelligent TV stuff may I return to the topic and, although naming another country, point to the 'fact' that massaging rating companies doesn't always give the 'right' result?

BTW Fitch just mentioned that it's rating for the U.S. of A. might be reviewed downwards if the debt ceiling limit was not adjusted in time. Now obviously the Thai Minister of Finance has a much better picture to offer to influence rating companies to upgrade

[Moruya]

Meanwhile, Thailand goes forwards, the PM's popularity rises, the economy strengthens, major long term infrastructure is being planned and implemented, the 300 minimum wage has not caused the economy to collapse, military tension with neighbouring countries is on the wane, Thai involvement with ASEAN is growing, BOI applications and approvals are high ( if not at record levels ), the military top brass seem to be cooperating with the Government and tourism is up.

This must hurt some on here.

Red underpants brigade?

Sent from my Nexus 7 using Thaivisa Connect Thailand mobile app

Self delete my illconsidered reply to excessively stupid, but typical of Thai Visa, comment from previous poster.

Hahahahahahahahahahahahha!

I thought your initial post was both excessively stupid AND ill considered

[philw]

Meanwhile, Thailand goes forwards, the PM's popularity rises, the economy strengthens, major long term infrastructure is being planned and implemented, the 300 minimum wage has not caused the economy to collapse, military tension with neighbouring countries is on the wane, Thai involvement with ASEAN is growing, BOI applications and approvals are high ( if not at record levels ), the military top brass seem to be cooperating with the Government and tourism is up.

This must hurt some on here.

Red underpants brigade?

Sent from my Nexus 7 using Thaivisa Connect Thailand mobile app

Self delete my illconsidered reply to excessively stupid, but typical of Thai Visa, comment from previous poster.

Hahahahahahahahahahahahha!

I thought your initial post was both excessively stupid AND ill considered

Never let the facts get in the way of prejuidice, eh???

[Moruya]

Never let the facts get in the way of prejuidice, eh???

Facts........

OK - substantiate your claim that Yingluck's popularity is on the increase?

The economy is no strenthening - far from it. Overspend is around 5% and national debt has risen by a staggering 20% of GDP since the Dems.

Remind me how much of the flood "infrastructure" that the massive loan was taken out for has been done?

The 300B wage went in 15 days ago - already seen stories of 250,000 unemployed in anticipation

Militaru tension - yes, they had a sectret meeting to discuss their response to the ICJ verdict

Thai involvement with ASEAN? You're kidding right? The government is too scared about impending disease

BOI up? They haven't published an annual report since the Dems were in power.

Tourism up since the massive floods. Splendid. Well done.