Kittirat brushes aside IMF's suggestions

[webfact]

Kittirat brushes aside IMF's suggestions



BANGKOK: -- The Government will have to study the budgetary transfers targeted at low-income agricultural households as proposed by the International Monetary Fund to replace the controversial rice pledging scheme.

Mr Kittirat Na-Ranong made the above remark in response to the IMF’s criticism against the populist scheme which, said the agency in its report, has racked up US$4.46 billion accumulated losses for the 2011-2012 harvests which could hurt Thailand’s economy if the scheme continues.

Regarding IMF’s suggestion that Thailand raises policy interest rate to accommodate rising inflation, Mr Kittirat responded that the IMF should take into account all relevant information before making the recommendation. He said that inflation rate remains low and increase of interest rate could backfire on the economy.

Regarding the current protests, the deputy prime minister said that foreign investors still have confidence in the Thai economy and will continue to invest in Thailand.

Foreign chambers of commerce in Thailand, said Mr Kittirat, understand that political protests are a normal phenomenon in a democracy.

Source: http://englishnews.thaipbs.or.th/kittirat-brushes-aside-imfs-suggestions/

-- Thai PBS 2013-11-14

[Thormaturge]

I love the comment about political demonstrations.

How long before tourist companies advertise holidays to see the demonstrations here?

Money back guarantee if people aren't marching in the streets plus free hand-clapper and tee-shirt of appropriate colour.

[casindonet]

The farangs again....you never will understand Thailand & Thainess . We are the hub of whatever HUBS that you can think of

Edited November 14, 2013 by casindonet

[Bluespunk]

"Regarding IMFs suggestion that Thailand raises policy interest rate to accommodate rising inflation, Mr Kittirat responded that the IMF should take into account all relevant information before making the recommendation."

I'm fairly sure that's what the IMF does.

"He said that inflation rate remains low and increase of interest rate could backfire on the economy."

Whereas the rest of your policies have been such a resounding success, mr white lies.

[MilesofSmiles]

Foreign chambers of commerce in Thailand, said Mr Kittirat, understand that political protests are a normal phenomenon in a democracy.

And to be fair, he's right about that.

Foreign investors might know Thais better than they know themselves.... history shows that things usually go pear-shaped, nothing changes, and the cycle repeats itself.

[Emptyset]

"Regarding IMFs suggestion that Thailand raises policy interest rate to accommodate rising inflation, Mr Kittirat responded that the IMF should take into account all relevant information before making the recommendation."

I'm fairly sure that's what the IMF does.

"He said that inflation rate remains low and increase of interest rate could backfire on the economy."

Whereas the rest of your policies have been such a resounding success, mr white lies.

Yeah, but is there anything wrong with what Kittirat said above? Obviously he's wrong in his defense of the rice scheme, but that's to be expected. No finance min would say 'sorry, we know it's a complete disaster but we have to keep the scheme because we're afraid of sparking massive protests amongst our core supporters'.

Still I'd like to see some concrete data on how it affects the household income of recepients of the scheme. I suspect the IMF is right though and it'd be better just to give a measure of direct income support. Yes, that would amount to just giving money away, but so what? At least it's all going directly to poor people and stops corrupt millers/politicians siphoning off the money. But that would never happen...

[Ricardo]

The DPM/FM can see trust in his government draining away, and the likely-cost of borrowing B2.2-trillion plus-interest over-50-years soaring, so is in-denial.

There isn't a recession here, all is going wonderfully, the protests on-the-streets are a sign of a healthy democracy, Thaksin knows what he's doing, the government-owned banks & their rising debts are no cause for concern, what does the IMF know about banking or national-finance anyway ?

Meanwhile, back in the real world, responsible authorities are warning that the Emperor has no clothes !

[JRSoul]

It's to be expected. No finance min would say 'sorry, we know it's a complete disaster but we have to keep the scheme because we're afraid of sparking massive protests amongst our core supporters'.

Still I'd like to see some concrete data on how it affects the household income of recepients of the scheme. I suspect the IMF is right though and it'd be better just to give a measure of direct income support. Yes, that would amount to just giving money away, but so what? At least it's all going directly to poor people and stops corrupt millers/politicians siphoning off the money. But that would never happen...

If there was any positive data on increase of poor farmers' incomes I'm sure it would have been presented rather than bland assurances from government lackeys. After more than 2 years of a policy costing hundreds of billions per year, you might think there would be a serious look at whether that policy was achieving its stated goals. Perhaps it was never intended to do that; the stated goals were merely a cover for vote buying and corruption, or am I just being cynical?

[MilesofSmiles]

The IMF report is at:

http://www.imf.org/external/pubs/ft/scr/2013/cr13323.pdf

Interesting reading.

[GentlemanJim]

Yet again, another display of utter arrogance from a member of this Governments Cabinet. First Moody's give a warning and then an organization no less than the IMF itself suggests an urgent course of action to prevent further deterioration of the economy and Kittirat says that the IMF should check all data first !Kittirat says that investors still have confidence, the same day it is reported that foreigners are pulling money out of Thai stocks and Investments! No doubt another lie to appease a demanding population at the moment. I feel there is little hope for this country.

[worgeordie]

The inflation rates are low, BUT the price of everything seems

to be increasing,especially foodstuffs, as the PM said it must

be all in our minds !

regards Worgeordie

[soi41]

So the classic words came from Kittirat this time: "IMF is not my father"!!

This guy is living proof of the with blind loyalty to Dear Leader, anyone with an IQ over 30( being generous) can become a cabinet-minister!!

[GBK]

Actually, the IMF are not always right. They recently told Britain that it was on the wrong course and yet the MPC are now considering raising interest rates.

In this case, however, they are probably closer to the mark.

[Emptyset]

The inflation rates are low, BUT the price of everything seems

to be increasing,especially foodstuffs, as the PM said it must

be all in our minds !

regards Worgeordie

Well, to be fair, if you just go on the statistics, you'd assume it was true that price rises were slowing. The consumer price index at the beginning of the year dropped to as low as it's been since the beginning of 2009, and is still lower than it's been since around March 2009. See: http://www.tradingeconomics.com/thailand/consumer-price-index-cpi

The IMF report also says:

"Despite two significant minimum wage hikes, core inflation declined gradually from 2¾ percent in early 2012 to under 1 percent in June 2013 (Figure 3). Increased labor costs appear to have been partly absorbed through lower profit margins, higher labor productivityor by cutting nonwage compensation. Headline inflation fluctuated in 2012 mirroring movements in energy and raw food prices, but fell significantly in the first half of 2013."

[Emptyset]

Yet again, another display of utter arrogance from a member of this Governments Cabinet. First Moody's give a warning and then an organization no less than the IMF itself suggests an urgent course of action to prevent further deterioration of the economy and Kittirat says that the IMF should check all data first !Kittirat says that investors still have confidence, the same day it is reported that foreigners are pulling money out of Thai stocks and Investments! No doubt another lie to appease a demanding population at the moment. I feel there is little hope for this country.

Read the report. It's far less hysterical than all that. It's a recommendation, not an 'urgent course of action'. Actually the report is mostly positive. The report also notes that Thai authorities are in broad agreement with the "IMF's assessment of prospects and risks". So it doesn't seem they're coming from radically different perspectives, despite this news report.

[Emptyset]

It's to be expected. No finance min would say 'sorry, we know it's a complete disaster but we have to keep the scheme because we're afraid of sparking massive protests amongst our core supporters'.

Still I'd like to see some concrete data on how it affects the household income of recepients of the scheme. I suspect the IMF is right though and it'd be better just to give a measure of direct income support. Yes, that would amount to just giving money away, but so what? At least it's all going directly to poor people and stops corrupt millers/politicians siphoning off the money. But that would never happen...

If there was any positive data on increase of poor farmers' incomes I'm sure it would have been presented rather than bland assurances from government lackeys. After more than 2 years of a policy costing hundreds of billions per year, you might think there would be a serious look at whether that policy was achieving its stated goals. Perhaps it was never intended to do that; the stated goals were merely a cover for vote buying and corruption, or am I just being cynical?

Corruption, perhaps. Not sure about 'vote buying'. If you consider it a mechanism for vote buying then doesn't that mean the money is going into the hands of the rural populace? Similarly, why would they be so concerned about it as to be moved to protest if they weren't getting any real benefit?

They do seem to be getting a fair bit more (12,000 per tonne compared to 7,500) than they did on the Democrats scheme, but that might not necessarily justify the additional costs, to say the least. The government say it'll take two or three years to judge it though. lol.

[klauskunkel]

"Regarding IMFs suggestion that Thailand raises policy interest rate to accommodate rising inflation, Mr Kittirat responded that the IMF should take into account all relevant information before making the recommendation."

I'm fairly sure that's what the IMF does.

"He said that inflation rate remains low and increase of interest rate could backfire on the economy."

Whereas the rest of your policies have been such a resounding success, mr white lies.

However, there is one thing the IMF could never, with all their acumen, specialists, know-how, connections, resources, ever take into account: the magical mystery of Thainess.

[MilesofSmiles]

Still I'd like to see some concrete data on how it affects the household income of recepients of the scheme.

Income is down as far as I can tell.

http://www.bot.or.th/Thai/Statistics/Graph/Pages/FarmIncome.aspx

For farm income effect. Nothing fantastic.

http://www.sasinsustainability.org/download/file/fid/294

* this

• http://thediplomat.com/2012/11/10/rice-piles-how-thailand-lost-its-spot-as-worlds-top-rice-exporter/comment-page-1/#comments
• http://www.flar.org/index.php/en/news/3122-thailand-rice-associations-farmers-call-for-urgent-review-of-pledging-policy
• http://tdri.or.th/en/tdri-insight/shaky-rice-scheme-enters-third-year/
• http://ideas.repec.org/cgi-bin/htsearch?q=Thai+rice+market

• http://www.loc.gov/lawweb/servlet/lloc_news?disp3_l205403656_text

(Id.) In contrast, low-income farmers possess only the ability to cultivate rice for consumption by their own households. T

hus, they would not have enough rice to enter into the rice pledging scheme. (Id.)

Furthermore, THAI PBS found that only 8% of farmers would benefit from this scheme.

(1 Year: Problems of Rice Pledging Scheme of Yingluck Administration, supra.)

• http://www.irrawaddy.org/business/thai-subsidy-scheme-leads-to-burmese-rice-sell-off.html
• http://www.irrawaddy.org/burma/smuggling-rice-to-thailand-like-coals-to-newcastle.html

The International Grains Council in London estimated the equivalent of 750,000 tonnes of

milled rice a year was coming into Thailand, senior economist Darren Cooper said.

That would be about 900,000 tons of unmilled rice, or paddy.“Clearly shipments (to Thailand)

started going up since the intervention scheme started,” Cooper said. “It is highly attractive for the neighboring countries to try

and get as much rice across to Thailand as possible and supply into the scheme.”

The United States Department of Agriculture put Thai rice imports at 600,000 tons a year in the first two years

of the scheme, jumping from 200,000 tons in 2010/11.

From the The latest IMF reports for 2013.

48. The staff sees clear merit in replacing the rice pledging scheme with budgetary

transfers targeted at low-income agricultural households. Targeted cash transfers are more

effective in supporting those households most in need and could be made conditional on schooling

and other measures to improve the labor market chances of the younger generation. Moreover,

uncertainty and lack of data concerning the rice paddy pledging scheme has eroded confidence in

Thailand’s public finance. With the pledging prices about 40 percent above market prices, it is

inevitable for the government to incur losses as long as the scheme remains unchanged. The

government has committed 410 billion baht to the revolving fund for managing the scheme, but it is

unclear how losses will be contained within the size of the fund

(Box 4). Therefore, policies such as the rice support scheme that support small-scale, low-

productivity agricultural activities may impede faster modernization of the economy.

Moreover, available resources are not always

utilized in the most efficient way—nearly forty percent of the labor force is employed in low-

productivity agriculture.

Edited November 14, 2013 by MilesofSmiles

[Emptyset]

"Regarding IMFs suggestion that Thailand raises policy interest rate to accommodate rising inflation, Mr Kittirat responded that the IMF should take into account all relevant information before making the recommendation."

I'm fairly sure that's what the IMF does.

"He said that inflation rate remains low and increase of interest rate could backfire on the economy."

Whereas the rest of your policies have been such a resounding success, mr white lies.

However, there is one thing the IMF could never, with all their acumen, specialists, know-how, connections, resources, ever take into account: the magical mystery of Thainess.

The interesting thing about this is that the IMF report doesn't say that interest rates should be increased. It says it agrees the interest rate cut was 'appropriate' but 'monetary policy' should be 'gradually normalized ... once the recovery is entrenched' or 'should inflation start to rise'. So is it just a case here of a journalist misreading the report, telling Kittirat that the IMF says he should raise interest rates because inflation is rising and him disagreeing with that specific statement having not read the report and realized that's not actually what it says? It actually seems like Kittirat and the IMF are in agreement.

[Emptyset]

Still I'd like to see some concrete data on how it affects the household income of recepients of the scheme.

Income is down as far as I can tell.

http://www.bot.or.th/Thai/Statistics/Graph/Pages/FarmIncome.aspx

For farm income effect. Nothing fantastic.

http://www.sasinsustainability.org/download/file/fid/294

* this

Thanks. Just looking through some of this now. Farm incomes and crop prices appear to have remained pretty stable. It's a shame we can't see figures for rice specifically here, because obviously this includes rubber and the like too (though I haven't seen everything you've posted yet). Anyway, as I said before, I'm definitely in agreement with the IMF on targeted cash transfers. Wealth is still redistributed, but more effectively, with less opportunity for corruption and no damage to rice exports etc. Neither would government wouldn't have to store huge amounts of rice. As the IMF also indicates, it would also allow for possible restructing of agricultural production while providing a safety net.

[varun]

I imagine his thought process would be:

" Who are these stupid farangs to tell me how I should manage my country's finances? "
" TIT, whatever works in Europe, won't work here, don't they realize that?! "

" Right then, let's consult our 'main-man' in Dubai"

[nong38]

What I dont understand is why are Thais and Thailand not running the IMF? And what is wrong with a good march and whistle blowing session to rally the country, Farangs should come and take note how to do things! Now inflation, the man in the street is not buying the right things, the Government is always right.

[smutcakes]

Obviously the guy has no clue, but 4.46 bln is hardly going to bankrupt the country.

[Mightyquinn]

Yesterday alone, foreign investors sold Thai shares worth Bt10.2 billion against purchases of Bt5.9 billion, resulting in net sales of Bt4.28 billion. This followed the Bt3.3 billion in net sales on Tuesday and over Bt1 billion on Monday. The year-to-date net-sell has ballooned to Bt123.95 billion. Global funds have also pulled some investment from Thai equities this month.

"There may be trouble... Ahead...... :#

[slapout]

The rice program was proposed and promised prior to the last election as a vote buying/populist carrot, for the vote in specific areas. After the fact (election won) the current program itself was implemented with the result being a massive graft of funds, the rice farmer getting about 10% more for his rice crop than under the old rice program which cost the taxpayer a pittance. compared to this one. The present government has implemented several other farm subsidies (rice, milk, corn, palm oil, etc) and they all have the common practice of the funds going thru several hands before the farmer receives a single bhat.

When you digest what the government says is in storage (rice) 10.5 million tons, amount repaid to the Ag bank, 140 billion baht, then do a little subtracting from the 600 billion investment (itsbee gone for 10 months), and just for grins add in monthly storage fees, grain losses as allowed by the government (15% just in transport), flood damage, fire damage, etc and you will find a staggering figure, to buy vote from/help 2.2 million+_ rice farmers.

[smutcakes]

Yesterday alone, foreign investors sold Thai shares worth Bt10.2 billion against purchases of Bt5.9 billion, resulting in net sales of Bt4.28 billion. This followed the Bt3.3 billion in net sales on Tuesday and over Bt1 billion on Monday. The year-to-date net-sell has ballooned to Bt123.95 billion. Global funds have also pulled some investment from Thai equities this month.

"There may be trouble... Ahead...... :#

3.3 billion thai baht?100 million dollars? OH nooeeeeessssss run for cover.

[spidermike007]

No problem, our communist pricing policies are not affecting our capitalist economy. Not one bit. Things do not work like that in the real world. We maintain absolute control of the world economy. Not sure why the IMF or the world bank, or whoever the hell they are, are making such a fuss. Don't they realize we are in total control? And don't they realize we have unlimited capital to spend. Wait a minute, I thought I was Blundering Barry, and this was Washington, for a minute! Maybe we don't have unlimited money to print.

[Mightyquinn]

Yesterday alone, foreign investors sold Thai shares worth Bt10.2 billion against purchases of Bt5.9 billion, resulting in net sales of Bt4.28 billion. This followed the Bt3.3 billion in net sales on Tuesday and over Bt1 billion on Monday. The year-to-date net-sell has ballooned to Bt123.95 billion. Global funds have also pulled some investment from Thai equities this month.

"There may be trouble... Ahead...... :#

3.3 billion thai baht?100 million dollars? OH nooeeeeessssss run for cover.

$100 million this week...... 125 billion so far this year...

Sent from my iPhone using Thaivisa Connect Thailand

[smutcakes]

Yesterday alone, foreign investors sold Thai shares worth Bt10.2 billion against purchases of Bt5.9 billion, resulting in net sales of Bt4.28 billion. This followed the Bt3.3 billion in net sales on Tuesday and over Bt1 billion on Monday. The year-to-date net-sell has ballooned to Bt123.95 billion. Global funds have also pulled some investment from Thai equities this month.

"There may be trouble... Ahead...... :#

3.3 billion thai baht?100 million dollars? OH nooeeeeessssss run for cover.

$100 million this week...... 125 billion so far this year...

Sent from my iPhone using Thaivisa Connect Thailand

Lets see what happens tomorrow, or the next day, i will wait with anticipation when we have a net inflow day for your messages of support for the Govt.

[Pi Sek]

The inflation rates are low, BUT the price of everything seems

to be increasing,especially foodstuffs, as the PM said it must

be all in our minds !

regards Worgeordie

Well, to be fair, if you just go on the statistics, you'd assume it was true that price rises were slowing. The consumer price index at the beginning of the year dropped to as low as it's been since the beginning of 2009, and is still lower than it's been since around March 2009. See: http://www.tradingeconomics.com/thailand/consumer-price-index-cpi

The IMF report also says:

"Despite two significant minimum wage hikes, core inflation declined gradually from 2¾ percent in early 2012 to under 1 percent in June 2013 (Figure 3). Increased labor costs appear to have been partly absorbed through lower profit margins, higher labor productivityor by cutting nonwage compensation. Headline inflation fluctuated in 2012 mirroring movements in energy and raw food prices, but fell significantly in the first half of 2013."

Hmm, official inflation figures... sorry, frankly I don't believe them!

I think you and I have had this conversation before, I have noticed prices for the consumer goods that I buy have gone up in some cases by almost 100% (e.g. I bought a "cheap" pair of football boots 3 weeks ago for 720 Baht, up from 450 Baht for the same pair last year). I can no longer find 30 Baht noodle soup/fried rice, and it now costs 150 Baht to fill up a Honda Wave. Rent is also significantly higher. Many things in the supermarket for around 10 Baht are now around 12 Baht. I'm not suggesting inflation is 20%, but there's no way real-life prices have gone up by 1-3%.

Yet again, another display of utter arrogance from a member of this Governments Cabinet. First Moody's give a warning and then an organization no less than the IMF itself suggests an urgent course of action to prevent further deterioration of the economy and Kittirat says that the IMF should check all data first !Kittirat says that investors still have confidence, the same day it is reported that foreigners are pulling money out of Thai stocks and Investments! No doubt another lie to appease a demanding population at the moment. I feel there is little hope for this country.

Read the report. It's far less hysterical than all that. It's a recommendation, not an 'urgent course of action'. Actually the report is mostly positive. The report also notes that Thai authorities are in broad agreement with the "IMF's assessment of prospects and risks". So it doesn't seem they're coming from radically different perspectives, despite this news report.

A recent Forbes editorial wasn't quite so optimistic:

http://www.forbes.com/sites/jessecolombo/2013/11/04/thailands-bubble-economy-is-heading-for-a-1997-style-crash/

In my opinion, the economy at the moment is in dire straits.