The Bank of Thailand could invest its foreign reserves via a sovereign wealth fund, but an amendment is required and the government has been recommended to issue bonds for the fund's investment.
Pridiyathorn: Bonds should be issued
"I think we can use some foreign reserves for investment, as they stand at US$190-200 billion. Foreign reserves are divided into two separate accounts. About $140 billion are in the general account for the banking department and the rest in the currency reserve account for the issuing department," MR Pridiyathorn Devakula, a former deputy prime minister and Bank of Thailand governor, told a seminar hosted by the Thai Chamber of Commerce.
He said some $30 billion could be taken from the currency reserve account, and the Thai government should issue bonds to facilitate the fund's investment as Thailand offers better returns than some countries and its economy seems to be healthy.
The government has tried to encourage the central bank to use foreign reserves to establish a sovereign wealth fund since the reign of Tarisa Wattanagase, the central bank governor from 2006-10.
As of lasr Friday, foreign reserves amounted to $173 billion and the net forward position made up another $20.9 billion.
The general account is a source of funding for the central bank to step in to the foreign exchange market to stabilise the local currency against the greenback.
Separately, MR Pridiyathorn suggested the government set a mid-year budget to borrow an additional 70-80 billion baht from the domestic market to offset the budget deficit.
It is also eligible to borrow 10% of the expenditure budget or 200 billion baht from abroad to finance some projects such as the infrastructure megaprojects if the 2-trillion-baht borrowing bill is mired in legal proceedings, he said.
The controversial borrowing bill will see Senate deliberation in the coming days, but the opposition Democrat Party has already announced it will take the bill to court if the Senate approves it.
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