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Source: www.asiaecon.org |

70 BILLION BAHT LOAN TO STIMULATE THAI ECONOMY


The Thai government is set to prepare the terms for borrowing over 70 billion baht ($1.97 billion) from international institutions this week as part of its strategy to mitigate the effects of the global economic downturn on the Thai economy.


The Thai government is set to prepare the terms for borrowing over 70 billion baht ($1.97 billion) from international institutions this week as part of its strategy to mitigate the effects of the global economic downturn on the Thai economy.

“We will borrow money to stimulate the economy,” said Thai Prime Minister Abhisit Vejjajiva. “If we do nothing, more people will be jobless, which will impact the economy more seriously.”

Prime Minister Abhisit, who survived a no-confidence vote in Parliament on Saturday, also said that more investment is needed to boost the economy and improve the country’s competitiveness.

Consequently, the Thai government is focusing more on medium- and longer-term measures to stimulate investment and employment. Thus, it plans on spending the 70 billion baht loan on creating and improving basic infrastructure, including water resources and roads, and other additional economic stimulus programs.

The loan is likely to come from the World Bank, the Asian Development Bank and the Japanese International Cooperation Agency (JICA).

Earlier this month, Prime Minister Abhisit gave the reason for borrowing from foreign lenders. “We asked for the credit line not because we have problems with monetary security as we still have high international reserves,” he said. “But I wanted to use money from various sources to revive the economy.”

According to Public Debt Management Office deputy director-general Chakkrit Parapuntakul, the 70 million baht loan would increase the country’s public debt from 36 percent to 42 percent of gross domestic product this year.

The loan comes in addition to the 116.7 billion baht (US$3.35 billion) stimulus package that the Thai government introduced in January. The stimulus package includes cash handouts for lower-income earners, tax cuts, expanded free education and subsidies for transport and utilities.

Finance Minister Korn Chatikavanij said that without any stimulus measures or government intervention, the Thai economy could easily contract by 8 to 9 percent this year.

Thailand’s export-driven economy has been hit hard by the global economic downturn, with analysis expecting it to be flat or contract by up to 1 percent this year. The Bank of Thailand had forecast that 1.07 million people, or 2.8 percent of the country’s total workforce, would lose their jobs this year.

Prime Minister Abhisit said that he will discuss details about the 70 million baht loan in a meeting with his economic team this week. The meeting would also include an evaluation of the effects of the global round of economic stimulus packages.

Source: www.AsiaEcon.org
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Source: www.asiaecon.org |


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