Thailand's rating safe for now: S&P

[webfact]

Rating safe for now: S&P
THE NATION

BANGKOK: -- THAILAND'S SOVEREIGN credit rating should remain unchanged over the next two years despite the country's political upheaval, said Standard & Poor's Ratings Services.

"However, we could revise our outlook to negative or lower the ratings if we view the likelihood of widespread and prolonged violence in these countries to have risen to one in three, or higher," the rating agency said in its latest report, titled "Election woes in Bangladesh and Thailand raise risk but don't yet undermine sovereign ratings".

S&P acknowledged that the next elected Thai government could face destabilising challenges following the main opposition party's boycott in the February 2 election, which weakened the government's legitimacy and undermined the strength of the democratic process.

"In our view, political pressures have been building up for several years. The demand for political reform in Thailand is complex and difficult to resolve. For that reason, we believe political uncertainties will remain elevated," it said in the report.

Likening the situation in Thailand to the situation in Bangladesh - with demand for highly antagonistic politics - the rating agency said the sovereign credit ratings of both countries should, however, remain unchanged.

"This assessment partly reflects our belief that the tensions will not boil over into prolonged and widespread violence. Such violence could exacerbate political instability and deal sustained damage to these economies, which have been resilient to past political turmoil," said S&P.

The agency views the current political tensions in the two countries as being the result of long-standing domestic pressures. Adding to this tension is animosity between their two current leaders.

In Thailand, the emergence more than a decade ago of a new group of political elites led by Thaksin Shinawatra was the genesis of the current political divide. Opposition from the traditional elites to Thaksin culminated in a September 2006 military coup.

The three changes of government triggered by events outside of the normal democratic process since 2006, including the coup, are testimony to the deepening polarisation of the electorate and the breakdown of the democratic mechanism, said the ratings agency.

Because the roots of these disagreements run deep, their resolutions are unlikely to be straightforward. The election boycotts mean that the government will face questions on legitimacy, and the recent election could even be declared invalid, requiring another election to be held, it said.

Lingering uncertainties

Meanwhile, street protests and legal uncertainties will continue. The National Anti-Corruption Commission is investigating more than 300 members of the last parliament for alleged misconduct in voting for a fully elected Senate last year.

Prime Minister Yingluck Shinawatra is also facing an NACC probe for alleged negligence in implementing the government's beleaguered rice-pledging scheme. These investigations may cause these individuals to lose their rights to hold political office, said S&P.

Meanwhile, if the ongoing protests lead to violence, a military intervention remains possible, it added.

Still, the ratings agency does not anticipate a major escalation of violence in the Kingdom, believing that supporters on both sides have strong economic interests in the country's stability and should rein in their supporters and prevent serious economic damage.

The protest leaders' reaction to a plan to disrupt air traffic in January is one example. So far, mass protests in recent years have had little impact on Thailand's industries and exports, with the exception of 2008, when protesters shut down Bangkok's main airports for a week.

Despite the global financial crisis and massive flood damage in 2011, Thailand's average real gross-domestic-product growth was 3.7 per cent in 2006-2012.

S&P noted that while there would be no change in the near-term rating, political instability had weakened the credit profile for Thailand.

Governments since the military coup have also seen weaker fiscal performance, partly because of lower revenue growth and political pressure to increase social spending. The controversial rice-pledging scheme was one such measure, it said.

"In this environment, it has been difficult for the Thai government to implement the needed infrastructure improvements and educational reforms. Economic growth prospects may have dimmed as a result," it continued.

The risks of events that could trigger near-term negative rating actions have risen, though they are still below the one-in-three probability associated with a negative outlook.

-- The Nation 2014-02-20

[Ricardo]

"In this environment, it has been difficult for the Thai government to implement the needed infrastructure improvements and educational reforms. Economic growth prospects may have dimmed as a result," it continued."

But surely the government was able to pass its Infrastructure-Bill, and the flood-spending bill as well, the implementation isn't a 5-minute thing ?

And falling economic-growth, after two-and-a-half years in-power, is surely a consequence of the governments' decisions, rather than being due to their having too little time ?

And can "educational reforms" refer to the failing free-tablet-for-every-student scheme ?

[Pond Life]

Does anyone actually have any faith in the S&P anymore !

It seems to me they were proven to be entirely bought off back in 2007.