PM Prayut denies the government is broke

[webfact]

PM denies the government is broke

 

 

BANGKOK, 8 February 2017 (NNT) - Prime Minister Gen Prayut Chan-o-cha has insisted that Thailand's financial situation remains strong, given the government's current reserves of 74 billion baht. 

The Prime Minister had been responding to criticism against the government’s financial status. He assured that every government project is being carried out according to regulation and for public benefit. Gen Prayut further stated that the government needs to spend the money to attract foreign investment and to carry out the reform process. 

Meanwhile, Finance Minister Apisak Tantiwong also responded to the criticism, assuring that there is enough money in the government coffers. He noted that if the government's reserves are too high, the government will have to pay a higher interest rate. 

The minister is pushing to amend legislation governing the management of financial reserves to allow the government to seek a short-term emergency loan only in an event of an emergency situation. The current law allows the government to take out an emergency loan with or without urgent justifications. 

The minister also insisted that the increase in excise tax on aviation fuel was not due to a decline in government coffers, but to promote fair pricing. Deputy Prime Minister Somkid Jatusripitak denounced those spreading rumors of the government's financial troubles as not understanding how the government manages the reserves.

 

-- nnt 2017-02-08

[webfact]

The country’s fiscal position remains strong, Prayut says
By The Nation

 

 

Academic says budget deficit has shot up over two years and will be a burden

 

BANGKOK: -- Prime Minister Prayut Chan-o-cha yesterday told his critics that the country’s financial position remains strong as evidenced by the large international reserves – currently ranked the world’s 18th highest – while a top academic has cautioned about the ballooning budget deficit which could become a burden for successive governments.

 

Thailand’s international reserves of US$177 billion, including foreign exchange reserves of US$169 billion, as of January 27, are solid and proof of the country’s creditworthiness in the eyes of the international community and foreign investors, Prayut said.

 

On Monday, Prayut was upset when asked by reporters about the low treasury reserves, which had dropped to Bt74.9 billion as of last month. Treasury reserves are similar to the government’s current bank account, which, some experts said, are not as important as the international reserves.

 

Full story: http://www.nationmultimedia.com/news/business/EconomyAndTourism/30305918

 

-- © Copyright The Nation 2017-02-08

[Thechook]

Enough left for family contracts and besides my brother has placed the military funds in his bank account for safe keeping.

[candide]

If he feels the need to deny it, it must be really worrying.....

[ezzra]

We're not broke, we just don't have money, so for anybody that is

the check is in the mail....

( a brand new Thai made Camry cost almost twice as much to buy

here than to buy the same car and with more accessories in Australia,  and , owing to huge taxes levied on cars here )

 

Edited February 7, 2017 by ezzra

[Thailand]

The lady doth protest too much.

[bokningar]

31 minutes ago, ezzra said:

owing to huge taxes levied on cars here

Not high enough if judged by the traffic situation 

[rkidlad]

'Gen Prayut further stated that the government needs to spend the money to attract foreign investment and to carry out the reform process'

 

Oh, I feel so special. Thank you. As a foreigner, I also have some other ways you can attract my lot. Fairness and equality, etc. Easier access to visas, etc. I know, I know - this is not my country so why should I feel I have any special rights. These to me aren't special rights. Simply common sense with common courtesies. After all you want our investment, right? 

 

You don't have to be spending billions to attract our money. You simply have to welcome us and be sincere. It's actually not that hard. 

 

[Brer Fox]

2 hours ago, webfact said:

the government needs to spend the money to attract foreign investment

The PM seems to be living in some sort of dream world. He can waste as much money as he wants but the fact remains countries run by military governments are not the most favoured places for foreign investors. Sovereign risk is high and in Thailand they have the added risk of having their businesses shut down by the military or stolen from them if they are successful. e.g. Australian gold mining company Kingsgate Consolidated.

http://www.abc.net.au/news/2016-12-16/australian-operated-thai-gold-mine-forced-to-close/8126180

 

Spending money on unnecessary submarines, tanks and combat aircraft does nothing to attract foreign investors.

[nasa123]

How match Dept Thailand have to another Country Per capita in Thailand old and young ?

PM you borrow 1 Bn in Norwegians Krone = About 5 Bn Bath, So we wonder when you want to start to pay back this loan ?

[Get Real]

22 minutes ago, rkidlad said:

'Gen Prayut further stated that the government needs to spend the money to attract foreign investment and to carry out the reform process'

 

Oh, I feel so special. Thank you. As a foreigner, I also have some other ways you can attract my lot. Fairness and equality, etc. Easier access to visas, etc. I know, I know - this is not my country so why should I feel I have any special rights. These to me aren't special rights. Simply common sense with common courtesies. After all you want our investment, right? 

 

You don't have to be spending billions to attract our money. You simply have to welcome us and be sincere. It's actually not that hard. 

 

Our money? I suppose that includes many people. I feel a little bit included in some way. For me everything is ok. I feel welcome. If that wasn´t the case, I just wouldn´t stay.

[LazySlipper]

Hmmm... 170 bn dollars works out to almost 6 trillion bht...

 

Indeed, as many think, this is a third world country... (tongue in cheek)

[Alan Deer]

Debt it self is not a problem - what could be a problem is if the national finances was managed by people who are not qualified to do so but got their jobs through graft nepotism etc...this inevitably leads to people in positions of high responsibility and power who simple aren't up to the job.

[rkidlad]

50 minutes ago, Get Real said:

Our money? I suppose that includes many people. I feel a little bit included in some way. For me everything is ok. I feel welcome. If that wasn´t the case, I just wouldn´t stay.

Good for you. 

 

I'm talking about foreigeners who'd like to start a business here with with 100% ownership and the not having to employ 4 locals for every foreigner working at the business, etc. 

 

I'm not taking about attracting tourists or people who work for international companies, etc. I'm talking about people who'd like to invest their cash and start a business here. After all isn't that what he meant by attracting 'foreign investment'. 

 

Or did he mean leave your money at the door and you're sure to see a return? You know - in a country that's just fallen down the corruption ranks. 

Edited February 8, 2017 by rkidlad

[aussieinthailand]

1 hour ago, Thechook said:

Enough left for family contracts and besides my brother has placed the military funds in his bank account for safe keeping.

So the junta has spent up big and the reserves are down what was it, 85%?   But they still want the submarines, tanks, Hawaii junkets, navy battle ship, and jet fighters etc...   Well they have already started cutting school funding, So I wonder what will be the next thing they cut?   The national health scheme? 

[Ricardo]

" The minister also insisted that the increase in excise tax on aviation fuel was not due to a decline in government coffers, but to promote fair pricing "

 

So the bus-operators have been complaining again, that they can't compete properly, with the low-cost airlines ?

 

" He noted that if the government's reserves are too high, the government will have to pay a higher interest rate. "

 

That sounds odd, my bank usually insists on a higher lending-rate, if I'm strapped-for-cash !  But if I were a government, I could set the rate on new bonds on-offer at whatever I wanted, and it's up to the market, whether or not they want to buy them ?

[johnnybgood]

If there is any doubt,  perhaps consult our posters chaing mai and naam

The Saint & Geavsy of ThaiVisa financial forum.

[ChrisY1]

With all his generals that have been left out of the trough, there would have been quite a lot of "placating" gifts been given that add to costs.....but otherwise, what has all the money been spent on....there's no projects started.....subs are years away...trains similar, if ever....lots of travel of course as always.....

[KhaoNiaw]

8 minutes ago, johnnybgood said:

If there is any doubt,  perhaps consult our posters chaing mai and naam

The Saint & Geavsy of ThaiVisa financial forum.

They're pretty good on this stuff and can tell you what it actually means. Unlike most posters who comment.

[phycokiller]

by reform process I presume they are referring to their salaries and perks?

[jayboy]

Hopelessly poor quality of comments so far.Here's a fair minded analysis which recognises the Junta's roll in clearing a gridlock but suggests real democracy must prevail if the economy is to improve.

 

http://www.eastasiaforum.org/2016/02/01/thailand-looking-shaky/

[klauskunkel]

Quote

Deputy Prime Minister Somkid Jatusripitak denounced those spreading rumors of the government's financial troubles as not understanding how the government manages the reserves.

Maybe you just didn't explain it very well?

[Emster23]

1 hour ago, Alan Deer said:

Debt it self is not a problem - what could be a problem is if the national finances was managed by people who are not qualified to do so but got their jobs through graft nepotism etc...this inevitably leads to people in positions of high responsibility and power who simple aren't up to the job.

This post is about Thailand, don't bring up USA!

Maybe current fiscal posture has to do with PM's exercise for all program: want's a government that is "lean and mean"?

[scorecard]

1 hour ago, Alan Deer said:

Debt it self is not a problem - what could be a problem is if the national finances was managed by people who are not qualified to do so but got their jobs through graft nepotism etc...this inevitably leads to people in positions of high responsibility and power who simple aren't up to the job.

 

Good point and in reality this has been the scenario in Thailand for decades.

 

Compare to Singapore; the ministers and all the high level permanent bureaucrats and recognised subject experts, highly insightful at the specific subject are and are people highly capable of thinking / re-thinking valuable policies and strategies, and with future vision.

 

An extremely low level of corruption in SIngapore is a big help.

 

Here in Thailand over the last 20 years (and more) how many ministers are / were subject experts? Close to none.

 

There are dozens of examples of ministers who have no alignment whatever - just one that quickly comes back in my memory - Health Minister Chalerm.

 

All the more reason for massive reforms. 

[Reigntax]

Not broke but definately broken 

[BlindMagician]

Kim mate, treat the Falang a bit better, especially when it comes to the murders....Wrong post?

[yellowboat]

There are two economies in Thailand.  The one for the entitled and the one for the average Thai.  The wealthy Thais will live well regardless and will be given the signal to adjust their assets when the time is right, like in many countries.  The Thai people will just struggle as they always have. 

[chiang mai]

Every year governement sets a budget for the amount of money they expect to spend and the things they want to buy, at the start of each year they start to spend that budgeted money using income that flows into the governement by way of taxes and other sources of income.

 

Towards the end of the year government typically overspends its budget by a small amount, in the case of Thailand, historically, this is about 2.5% of GDP. In other countries that overspend might be closer to 9%. In some countries the difference between income and expenditure is positive, meaning more money came in than went out.

 

The money that governement spends throughout the year is income that is received during the same time frame, a buffer exists in the form of Treasury reserves which can be likened to an overdraft facility, simply, if there is a need to spend an unbudgeted amount the Treasury Reserves will allow this. When unbudgeted money is spent this is known as deficit spending, spending money that wasn't budgeted hence the term, budget deficit.

 

When there's a need to spend unbudgeted money there are two choices, borrow from a third party and pay interest on the loan or borrow from the Treasury and forgo any investment income they might receive from it - in times of low interest rates it makes sense to borrow from Treasury rather than pay interest to a third party and that's exactly what's happening at present.

 

Finally, governement did announce last year their intention to sustain a larger deficit hence the current news is no surprise to anyone who understands and follows these things, the problem is that most people don't hence many of the uninformed posts we've seen in recent threads on this subject. http://www.nationmaster.com/country-info/stats/Economy/Budget-surplus/%2B-or-deficit/--

 

On a related subject:

 

Foreign Currency Reserves is foreign currency managed by the BOT, it's money that allows Thailand to trade internationally - where does this foreign currency come from?

 

Various sources including tourism and export payments, the latter being typically settled in USD, (about 65% I believe). It used to be that exports that were paid for in foreign currency had to be sold to the BOT in exchange  for Thai Baht, that had the effect of causing the Baht to strengthen and subsequently obliged BOT to spend Baht  reserves and buy their own currency in order to weaken the baht once again - a viscous and costly cycle.

 

As can be seen, as exports improve then so do foreign currency reserves and so the Thai Baht strengthens. A partial solution to this problem is to weaken the foreign currency controls and allow exporters to hang on to their foreign currency earnings and not be forced to sell them to BOT which means the Baht wont strengthen as quickly and BOT wont have to spend the Foreign Currency Reserves - the forgoing is currently happening on a phased in basis. A further consequence is that the foreign currency reserves will not accumulate as quickly as they did in the past, they may even decrease.

 

 

Edited February 8, 2017 by chiang mai

[Destiny1990]

Place back the beach chairs and umbrellas in Patong to get some extra cash flow??

[Destiny1990]

2 hours ago, Get Real said:

Our money? I suppose that includes many people. I feel a little bit included in some way. For me everything is ok. I feel welcome. If that wasn´t the case, I just wouldn´t stay.

No you misunderstand only your money is welcome your not.