Former Bank of Thailand governor Pridiyathorn Devakula has warned the government about excessive public debt because of its populist policies.
MR Pridiyathorn: Call off the rice mortgage scheme
"I'm concerned that the public debt will soar," MR Pridiyathorn said on Friday at a seminar on the impact of populist polices on the economy.
He said Thailand's public debt was 44% of gross domestic product in January but the government "doesn't seem to be worried about it".
He said the government was planning to acquire 2.2 trillion baht in loans for infrastructure projects and already had many projects to spend the money on, such as water management.
Other populist projects, particularly the rice pledging scheme, would cause the country to lose 140 billion to 170 billion baht a year. At the current rate, public debt is expected to increase to 65% of GDP in 2019, he said.
The government's fiscal planners for many years have had a ceiling of 60% of GDP for public debt, and the figure has been well below the limit.
Policymakers have said that by taking loans out gradually and managing spending carefully, they can keep debt well within the set limits.
"The government must now revise [the populist policies] and stop some of the projects such as the rice mortgage scheme," said MR Pridiyathorn, a former finance minister.
The Thailand Development Research Institute (TDRI) recently forecast that public debt could balloon to between 70% and 80% of GDP because of the huge losses caused by the rice pledging scheme.
Another speaker at the seminar said the planned 2.2 trillion baht in loans would raise the competitiveness of Thailand's tourism industry.
According to a latest study by the World Economic Forum (WEF), Thailand ranked 43rd globally in the Travel and Tourism Competitiveness Index (TTCI), down from 41st last year.
Thanavath: Infrastructure spending will help tourism competitiveness.
Malaysia ranked 34th, up from 35th last year, and Singapore was placed 10th, said Thanavath Phonvichai, director of the Economic and Business Forecasting Centre at the University of the Thai Chamber of Commerce (UTCC).
Mr Thanavath said Thailand had to strengthen its infrastructure, linkes between tourist destinations in regional areas and the information system. Many foreign tourists now used WiFi internet to help them locate tourist spots in different areas, he added.
The planned 2.2 trillion baht in loans would be invested in high-speed rail lines linking Bangkok, Phitsanulok, Chiang Rai and southern China, and also on third generation (3G) telecommunication services.
"These investments will push Thailand to a higher ranking, putting the country right up on the ranks with Malaysia and Singapore in five years," Mr Thanavath said.
He said the plan to extend the rail mass-transit system in Bangkok would make it easier for tourists to travel to other commercial areas of the capital such as Yaowarat and Koh Ratanakosin, and this would generate more tourist arrivals and income to the country.
As for the appreciation of the baht to the US dollar and the euro, he said it would not have a big impact on the tourism sector because most tourists now are from Asian countries.
"Tourists from the Asean are the main market for Thailand and they're replacing the European and US markets," said the economist.