Economic officials still optimistic

Economic officials still optimistic

The governor of the Bank of Thailand believes the impact of the coup will be short-lived while a senior Finance Ministry official expects economic stimulus measures to arrive quickly.

Central bank chief Prasarn Trairatvorakul said Thursday's coup was certainly not the first in Thailand, and that investors understood current conditions because the political deadlock had persisted for seven months.

Dr Prasarn also said he believed the economy should not shrink in the second quarter.

Much would depend now on attempts to explain the situation in Thailand to the global community and the quick formation of the next government, he said. He thinks that if a government can be formed soon and confidence restored, the economy should recover quickly.

The economy contracted by 0.6% year-on-year in the first quarter, and by 2.1% from the fourth quarter of 2013, reflecting the impact of the politcial stalemate, the National Economic and Social Development Board reported last week.

Somchai Sujjapongse, the director-general of the Fiscal Policy Office, said the Finance Ministry was working on ideas to stimulate the economy.

He said the focus was on the quick preparation of the 2015 budget and rapid payment of billions of baht owed to farmers for pledged rice, which would inject money into the eeconomy.

Gen Prayuth Chan-ocha, the coup leader and acting premier, said on Friday that paying farmers would be his first priority.

Mr Somchai said he hoped the budget could be announced in time to take effect on Oct 1, the start of the 2015 fiscal year.

He also said the 7% value-added tax should be extended from Sept 30 this year, calming market worries that an increase to 10% was being considered as state revenues are short of targets.

As well, he said, the corporate tax rate of 20% should remain in place. Some commentators said the government might lift the rate back to the old level of 30%, something it has the option to do after Dec 31, 2014.

"The Ministry of Finance should implement all measures right away because [military] authorities now have full power and the permanent secretary for finance is acting as the minister," Mr Somchai said.

In his view, it was still difficult to assess the economic impacts of the coup. He said other countries may disagree with any coup but if national leaders could assure them that economic policies remained in place and the country remained open, foreign investors would return.

Meanwhile, he said, Rangsun Sriworasart, the ministry's permanent secretary, has asked authorities to maximise tax collection efficiency because state revenues remain far below target.

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