Kittiratt pushes for stabilised baht

Kittiratt pushes for stabilised baht

FINANCE MINISTER WARNS OF A POTENTIAL ECONOMIC SLOWDOWN

Finance Minister Kittiratt Na-Ranong has warned that the economy might slow down if nothing is done to curb the strong baht.

Speaking on Prime Minister Yingluck Shinawatra's weekly television programme yesterday, Mr Kittiratt said several economic agencies had forecast that the Thai economy could expand 4.5-5.5% this year. He said the average of 5% growth was not based on the current strong baht, adding if the currency is not forced to stabilise at an appropriate level, the economy might expand more slowly.

Mr Kittiratt, who is also a deputy prime minister, said the stability of the baht is the key objective.

A weaker baht would push up the cost of imported goods but a strong currency would have an impact on the export sector.

The minister was commenting on the baht's appreciation from 31 to the US dollar to 29, a rise of more than 6%, since late last year, making it the strongest performing currency in the region.

He agreed that the baht's appreciation stemmed from foreign capital inflows targeting bond markets rather than direct investment.

Mr Kittiratt said the finance minister was required by law to follow the Bank of Thailand Act in overseeing the country's economy.

He said he would not breach the law while respecting the responsible committee tasked with monitoring the economy.

Mr Kittiratt had been accused recently of putting pressure on the Bank of Thailand (BoT) to cut the policy interest rate, currently standing at 2.75%.

Earlier, he had said he would prefer to see the benchmark slashed by as much as one percentage point.

"What we are discussing is how to find ways to mobilise our economy's full potential without giving privileges to particular groups," he said, citing Friday's meeting between the ministry, the BoT and the National Economic and Social Development Board (NESDB).

"To govern the economy as a whole, the government needs to ensure equal benefit sharing," he said.

Mr Kittiratt said after Friday's meeting that the parties agreed the current policy rate was too high and that the central bank governor had promised to discuss an interest rate cut with the Monetary Policy Committee.

Raising the question of the effect of the government's two trillion baht loan for infrastructure mega projects over the next seven years, Mr Kittiratt said each project needed to be approved by the NESDB.

He brushed aside critics' concerns that the country would be hit with a long-term debt burden, saying the low interest rate would help the government pay back loans earlier than expected.

"The worthy project investments will keep the economy expanding, at least until 2020," Mr Kittiratt said.

"When the country's logistical capacity is sustained, it will be beneficial to the Thai economy and the country's revenues."

Do you like the content of this article?
COMMENT (2)