Kittiratt welcomes policy rate cut but warns political row could drag down economy

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Kittiratt welcomes policy rate cut but warns political row could drag down economy
Chairat Srisuk,
Vipaporn Chitsomboon
The Nation


Kittiratt

BANGKOK: -- Finance Minister Kittiratt Na-Ranong has warned that political unrest could hurt economic growth, which may be less than 3 per cent this year, while welcoming the Bank of Thailand's policy-rate cut amid slowing growth and a month of anti-government demonstrations that he says have weighed on investor confidence.

The BOT's Monetary Policy Committee cut the policy rate by 25 basis points to 2.25 per cent in its meeting on Wednesday. The central bank also lowered its estimate for 2013 growth this week to around 3 per cent from the previous forecast of 3.7 per cent. Gross domestic product expanded by 2.7 per cent year on year in the third quarter.

Kittiratt, who is also a deputy prime minister, said the protesters occupying government offices had interrupted state agencies' operational efficiency, and he hoped for rapid resolution of the unrest.

"Political gatherings are fine, but occupying state offices is too much. There have been talks with foreign investors about the political situation; however, they expressed not much concern, believing that the Thai economy will grow in 2014. It's not easy [to resolve the dispute] and public- and private-sector collaboration is required," he said.

The fourth quarter is an important driver of the economy as it is the first three months of the 2014 fiscal year and should see significant disbursement of the government budget.

However, if foreign governments continue to warn their citizens about travel to Thailand, that could affect growth in the quarter, Kittiratt said.

GDP growth could end the year below 3 per cent, he said, but he welcomed the fact that the BOT had finally cut the policy rate.

He said the baht had depreciated to an appropriate level and should stabilise to help spur exports next year.

The baht slumped by 3 per cent in November.

Kittiratt said that if the issues driving the protests remained unclear, that could affect foreign investors' confidence.

Protesters started rallying last month to oppose a proposed amnesty bill that might have allow ousted former prime minister Thaksin Shinawatra to return to Thailand. That bill was withdrawn, but they now seek to oust his sister, current Prime Minister Yingluck Shinawatra, and dismantle what they call the political network of Thaksin, who was toppled in a 2006 coup.

"While economic conditions don't look sound, social unrest is adding to investor concerns," Bloomberg quoted Yuji Kameoka, chief currency strategist at Daiwa Securities Co in Tokyo, as saying.

According to Bloomberg, the Finance Ministry sold Bt37 billion of three-year notes on behalf of the Bank for Agriculture and Agricultural Cooperatives on November 25, short of its Bt75-billion goal. According to the Thai Bond Market Association, at least four bond sales to fund rice purchases failed to achieve targets in July and August.

"This growing political tension might have made it more important for them to raise funds for the rice scheme," Bloomberg quoted Kobsidthi Silpachai, head of capital markets research at Kasikornbank, as saying in reference to the pledging programme.

The International Monetary Fund said in a report this month that the rice-pledging scheme should be dropped in favour of budget transfers to low-income households.

"The rice-purchasing scheme is already putting a severe strain on Thailand's public finances and augurs badly for the credibility and transparency of fiscal policy," Bloomberg quoted Nicholas Spiro, London-based managing director of Spiro Sovereign Strategy and a former consultant at Medley Global Advisors, as saying this week.

But Kittiratt said that despite the programme's high cost, the government was able to manage it because of sufficient liquidity in the financial system and a strong fiscal stance.

He said it was not new for the Thai capital markets to be affected by politics, and several political crises in the past had turned into investment opportunities for those who understood Thailand.

In response to recent consistent sales of Thai stocks by foreign investors, Kittiratt said that when the protesters left the government offices, foreign investment would flow back in.

The SET Index yesterday gained 11.68 points to close at 1,371.13 on turnover of Bt27.5 billion.

Meanwhile, government ministries have instructed their executives and agencies to step up security and prepare to deal with continuing anti-government rallies this weekend. Transport Minister Chadchart Sittipunt has instructed executives of agencies under his ministry to make their staff understand that while it is their personal right to join the demonstrations, their action should not disrupt public services.

To that same end, the executives also must prepare back-up plans in the case a large number of staff take days off.

Key transport agencies such as Airports of Thailand, the State Railway of Thailand and the Mass Rapid Transit Authority were also told to step up security in main strategic areas such as airports and the Skytrain and keep monitoring the situation.

Energy Minister Pongsak Ruktapongpisal instructed the ministry's executives, agencies and enterprises, including PTT, PTT Global Chemical, and the Electricity Generating Authority of Thailand, to seek measures to prevent energy infrastructure from any impacts from the demonstrations.


-- The Nation 2013-11-30

[NongKhaiKid]

Wow, he's actually said something which isn't a ' white ' lie.

[waza]

What he actually means is that..........

BANGKOK: -- Finance Minister Kittiratt Na-Ranong has warned that political unrest could hurt economic growth, which may be less than 3 per cent this year, while welcoming the Bank of Thailand's policy-rate cut amid slowing growth and a month of anti-government demonstrations that he says have weighed on investor confidence.

That is effecting the sale of government bond which are sorely needed to bail out the technically insolvent BAAC before it folds. Furthermore, these protests also are scaring away tourist reducing badly needed foreign currency revenue now that the income from rice exports has been decimated.

With this government everything boils down to two points, Thaksin and money, these are its primary motivators and its only concerns,

Edited November 29, 2013 by waza

[Thai at Heart]

What he actually means is that..........

BANGKOK: -- Finance Minister Kittiratt Na-Ranong has warned that political unrest could hurt economic growth, which may be less than 3 per cent this year, while welcoming the Bank of Thailand's policy-rate cut amid slowing growth and a month of anti-government demonstrations that he says have weighed on investor confidence.

That is effecting the sale of government bond which are sorely needed to bail out the technically insolvent BAAC before it folds. Furthermore, these protests also are scaring away tourist reducing badly needed foreign currency revenue now that the income from rice exports has been decimated.

With this government everything boils down to two points, Thaksin and money, these are its primary motivators and its only concerns,

I await inflation to start moving and oil prices to jump with this interest cut. Exports have stalled, but what a load of bs their estimates are.

They missed by miles.