IMF joins rice scheme critics

IMF joins rice scheme critics

The International Monetary Fund (IMF) has joined a long list of critics which include the World Bank, Moody's Investor Services and the Thailand Development Research Institute in opposing the government's populist rice-pledging scheme.

In its annual review of Thailand's economy, the IMF says the populist scheme has accumulated losses of at least US$4.46 billion since it was introduced in 2011.

It warned that confidence in the country's finances would be undermined if the policy remains unchanged and urged the scheme and other generalised subsidies be replaced with programmes that are targeted at vulnerable groups, including low-income farming households.

"With the pledging prices about 40% above market prices, it is inevitable for the government to incur losses as long as the scheme remains unchanged," said the IMF in its report.

"The government has committed 410 billion baht to the revolving fund for managing the scheme, but it is unclear how losses will be contained within the size of the fund."

The IMF also noted the lack of transparency under the scheme, saying the lack of information about the programme has diminished confidence in Thailand's public finances.

Rather than hitting back at the IMF as it did in the face of similar criticism by the World Bank and Moody's, the government, in particular the Commerce and Finance ministries which are directly involved in the rice-pledging scheme, should thank the IMF for its mild criticism of the policy.

The international agency's estimate of US$4.46 billion in accumulated losses is quite conservative and close to the government's own figures of about 120 billion baht in accumulated losses since 2011 _ as against the 400 billion baht losses estimated by deputy finance permanent secretary Supa Piyajitti.

In the past, the government has brushed aside all criticism and suggestions, no matter how constructive, of the rice-pledging scheme.

It should stop behaving like an ostrich. Instead, it should take into consideration the IMF's warning of the negative consequences of the programme, as well as its advice that it replace or overhaul the policy.

To begin with, the Commerce Ministry must come clean on all rice deals, including those that are still pending in negotiations.

The price of rice sold in each deal, the amount of rice involved, and the names of the customers must be made public.

Such transparency will do away with the suspicion that some politically-connected traders might have benefited from fire-sale deals.

The Commerce Ministry's standard argument that information such as the price for each rice deal is commercially confidential and cannot be disclosed rings hollow.

The rice deal reached by the government with China recently in which Beijing will buy one million tonnes of our rice, is a case in point.

No information about the selling price is available except for a brief statement from Commerce Minister Niwatthamrong Bunsongphaisan that the price is in accordance with the world market price.

It is high time the government wakes up and accepts the truth that the rice scheme is a gross mistake and not worthy of supporting any longer, given that it is likely to cause even more damage to the economy.

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