FPO lauds rapid-fire stimulus

FPO lauds rapid-fire stimulus

Some 20 billion baht in loans has been taken out by Village Funds as the speed of budget disbursement for infrastructure gathers pace, says a senior Finance Ministry official.

These developments are helping to shore up economic growth amid export contraction, Fiscal Policy Office (FPO) director-general Krisada Chinavicharana said during a monthly press briefing on economic conditions.

He said 6 billion and 8 billion baht for infrastructure investment were drawn down in the fiscal second and third quarters, respectively, and an additional 9 billion was disbursed in July and August.

Krisada: VAT revenue surging in September

After taking office last month, Deputy Prime Minister Somkid Jatusripitak and his economic team launched their first stimulus package to help rural people battered by low farm prices, drought and the spluttering economy.

The 136-billion-baht package included no-interest loans of 1 million baht each for two years to 59,000 Village Funds, a 5-million-baht budget for 7,255 tambons for building and repairs, and acceleration of budget disbursement for small projects worth less than 1 million baht.

Mr Somkid has shifted to a domestic consumption-driven model to spur growth amid global economic uncertainty.

Exports fell by 6.69% year-on-year in August to a value of US$17.7 billion, their second-worst decline this year after a 7.87% drop in June. For the first eight months of 2015, shipments totalled $143 billion, down 4.92% year-on-year.

With exports, which account for 61.7% of GDP, remaining in the red for an eighth month in a row in August, the FPO is maintaining its forecast of a 4% contraction this year, Mr Krisada said.

Export value must reach $18.9 billion a month on average during the rest of the year to make the 4% contraction possible, he said.

But Mr Somkid yesterday played down concerns over export prospects, saying Thailand's shipments were unlikely to see contraction in 2016 as the economies of the US, Europe and other developed countries were projected to improve.

"I haven't yet seen signs pointing to a contraction in exports next year," he said. "What we're seeing right now is growing positive signs of recovery in the EU and the US and many major countries."

Arkhom Termpitayapaisith, secretary-general of the National Economic and Social Development (NESDB), warned on Monday that exports could become more critical next year, as the NESDB wondered if tourism alone would be sufficient to shore up the overall economy.

Mr Krisada said collection of value-added tax (VAT), a proxy for domestic consumption, jumped 12% year-on-year in September, according to the Finance Ministry's primary data.

August VAT collection fell at an annual rate of 2.4% as a 0.2% growth in revenue from domestic purchases of goods and services failed to offset a 5.9% contraction in receipts from imported goods.

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