Thailand's ex-central bank chief endorses national reserve spending for mega projects

[webfact]

Thailand's ex-central bank chief endorses national reserve spending for mega projects
By English News



BANGKOK, Oct 10 – Former central bank governor Pridiyathorn Devekula has thrown his support to a move to partially transfer Thailand’s international reserves to set up the national wealth fund for investment in the government's Bt2 trillion infrastructure development.

Mr Pridiyathorn, formerly deputy prime minister and finance minister, was referring to a proposal by Ampon Kittiampon, chairman of the Bank of Thailand (BoT) board of directors, to invest in Thai government bonds and mega projects through the national wealth fund.

According to Mr Ampon, investment capital for the wealth fund would come from the country's international reserves.

Mr Pridiyathorn said the idea was proposed by central bank governors and finance ministers in several previous governments but it would not materialise unless the Bank of Thailand Act, B.E. 2551 (2008) is amended.

Thai government bonds are more secure than those of other countries and the interest rate is higher, he said, but indicated that Mr Ampon must be clear on which parts of the international reserves he wants to withdraw and how much.

The country’s reserves are at US$200 billion and consist of two accounts – US$140 billion in the management account and US$60 billion in the bond issuance account.

There should be no problem if about US$30 billion is taken from the reserves, he said.

Mr Pridiyathorn said he believed the US would successfully expand its debt ceiling before the October 17 deadline – a move that will contribute to US economic restoration.

US and European economies are showing sign of gaining strength while China and Japan are also springing back, he said.

He predicted a positive sign for Thailand’s exports in the final quarter of the year and next year, and consequently expanded domestic consumption.

The former finance minister, however, urged the government to speed up disbursement of the 2014 budget and execution of the Bt2 trillion investment for infrastructure development.

If the bill to borrow Bt2 trillion is rejected by the Constitution Court, the government can switch to deficit budgeting at Bt70-80 billion, or seek additional borrowing at Bt200 billion under the law which empowers the Finance Ministry to acquire loans for economic development, he said. (MCOT online news)


-- TNA 2013-10-10

[NongKhaiKid]

Mega-projects again and now a national wealth fund to help back them or in other words another till for hands to find their way into.

[siampolee]

Thai government bonds are more secure than those of other countries and the interest rate is higher, he said, but indicated that Mr Ampon must be clear on which parts of the international reserves he wants to withdraw and how much.

If the bill to borrow Bt2 trillion is rejected by the Constitution Court, the government can switch to deficit budgeting at Bt70-80 billion, or seek additional borrowing at Bt200 billion under the law which empowers the Finance Ministry to acquire loans for economic development, he said. (MCOT online news)

So no matter what the money can and will be borrowed thus as a consequence Thailand and its people will be enslaved into debt bondage for many a year.

Looks like the lure of the trough of the swill corruption is indeed spreading its delicate aroma of filthy lucre further afield to attract all and sundry whose olfactory senses have it seems become numb to the real stench of this swill of corruption.

Note however of course the runts of the litter, Mr. and Mrs.Somcahi, the little people of Thailand will get the stench of the debt to clear away rather than the self enriching nourishing swill of corruption

i

[pedro01]

Thai government bonds are more secure than those of other countries and the interest rate is higher, he said, but indicated that Mr Ampon must be clear on which parts of the international reserves he wants to withdraw and how much.

+1

So Thailand pays higher interest rates to reflect LOWER risk?

ooookkaaaaaaay....

[pedro01]

here kitty, kitty....

[AleG]

There goes the piggy bank...

[Pimay1]

I wonder who got to Mr Pridiyathorn.

[Valentine]

If he really wants to help the country why not push for the wealth fund to lend at low interest rates. After all it is supposedly risk free & the reserve bank is an arm of the Thai people.

[lungmi]

High Speed flying pigs.

[Robby nz]

So much for overseas investors.

We were told recently that 60% of the 2.2 trillion would come from Thai banks and now it would appear the rest will come from national reserves.

And how about :

He predicted a positive sign for Thailand’s exports in the final quarter of the year and next year, and consequently expanded domestic consumption.

And another headline today :

Thai industrialists predict grim economic outlook

[rgs2001uk]

Bring it on.

Whats that I hear playing in the background, happy days are here again?

50 baht to the $ great stuff.

[Thai at Heart]

Thai government bonds are more secure than those of other countries and the interest rate is higher, he said, but indicated that Mr Ampon must be clear on which parts of the international reserves he wants to withdraw and how much.

+1

So Thailand pays higher interest rates to reflect LOWER risk?

ooookkaaaaaaay....

In think they meant to say "despite lower risk".

[gemini81]

Mega graft on the way. I recall a little square faced, slant eyed weasel who hides and shops in Dubai who loved 'mega projects.'

[jbrain]

but indicated that Mr Ampon must be clear on which parts of the international reserves he wants to withdraw and how much.

The country’s reserves are at US$200 billion and consist of two accounts – US$140 billion in the management account and US$60 billion in the bond issuance account.

There should be no problem if about US$30 billion is taken from the reserves, he said.

That is of course taken in consideration that they don's want it ALL

[JoeThePoster]

He predicted a positive sign for Thailand’s exports in the final quarter of the year

Santa Claus is coming to town.

[billd766]

He predicted a positive sign for Thailand’s exports in the final quarter of the year

Santa Claus is coming to town.

I hope he comes my way this year.

[Pib]

There should be no problem if about US$30 billion is taken from the reserves, he said.

Just another form of politician white collar crime. Just think of the number of votes this would buy during the next election.

[SOTIRIOS]

.........it's easy to spend other peoples money.......

[BlackJack]

I will have 2 of what ever he's drinking

[laocowboy2]

I have met (and dealt with) Pridiyathorn Devekula in the past. He is straight as a die - and a very competant economist. While the temptations of a large pot of investable cash are obvious, sovereign wealth funds operate successfully in many places - with Norway and Singapore being notable examples.

Moreover all he is saying is that a small portion of the reserves could be used to finance the projects. It is not at the financing level that any 'leakage' will take place but rather at the spending/contract stage. Ideally we would have a proper sovereign wealth fund headed by someone like PD that could also oversee how the project money was spent (but not be involved in actual matters contractual) - and cry foul if necessary

[laocowboy2]

I think that this is a dig at the US and at most of the souther Eurozone countries - Thailand has little or no net foreign debt and an overall low debt to GDP ratio. Italy and Spain however..... and who knows about the US this time next month!

Thai government bonds are more secure than those of other countries and the interest rate is higher, he said, but indicated that Mr Ampon must be clear on which parts of the international reserves he wants to withdraw and how much.

+1

So Thailand pays higher interest rates to reflect LOWER risk?

ooookkaaaaaaay....

[rixalex]

I have met (and dealt with) Pridiyathorn Devekula in the past. He is straight as a die - and a very competant economist.

Remember his son, Nattakorn Devakula, very well, on Channel 11 News. Extremely staunch Shinawatra supporter. Believe he might have a gig on Voice TV now, surprise surprise.

Whilst his son obviously doesn't speak for his father, it seems unlikely that the acorn has fallen too far from the tree.

As far as being a competent economist is concerned, indeed i think he must be. He's worked in the civil service for 25 years, and yet in 2007 declared his assets as being at over 700m baht.

[Emdog]

mega project = mega graft. If the money were spent on decent railway system, driver ed, etc might be worth it.

[khunken]

Ah but they 'forget' that the government swept B1,1tn under the BOT's carpet so that the 'urgent' B350bn flooding abatement could be funded. That was around 2 years ago & we have seen how much abatement has followed.

Setting up a sovereign investment fund is a good idea but linking it to the infrastructure projects is a bad idea. The fund needs to be professionally managed with no political influence (virtual impossibility here) and invest in viable projects - not the white elephant HSR.

[rubl]

An yet another government fund being borrowed from by the government with the usual transparancy in reporting on it's (mis)use I guess?

BTW what's the status of the THB 1.14 trillion swept under a carpet ar BoT?

[Thai at Heart]

If a proposal like this was put up by the least corrupt country in the world, it should still attract suspicion.

Using central bank funds to invest in infrastructure in a country in Thailand, is literally akin to raiding the central bank.

[hammered]

Pridiyathorn is spot on with this assessment. However, do not expect the Bank of Thailand to sepnd any money on developing the country. That is not their goal. They are holding a level of reserves far higher than is needed. But hey politics gets in here too.