Ministry, BoT rule out using drastic measures
published : 25 Nov 2021 at 04:00
newspaper section: Business
The Finance Ministry and the Bank of Thailand (BoT) have both made clear that they will not use drastic fiscal and monetary measures in mitigating the impact of the prolonged Covid-19 pandemic as such extreme measures might affect economic stability.
Finance Minister Arkhom Termpittayapaisith said the government has already introduced two emergency loan decrees to allow it to borrow a combined 1.5 trillion baht to prop up the pandemic-hit economy.
In addition, it has raised the ceiling of the debt-to-GDP ratio to 70% from the previous 60% to provide more fiscal room for the government to tackle the impact of the contagion.
The government will not resort to extreme measures to revive the economy, Mr Arkhom said at an economic seminar on Wednesday hosted by Prachachat Turakij newspaper.
He added that some short-term measures should be phased out once the situation improves. However, the government will maintain the schemes designed to ease the burden of targeted groups of people, such as the needy and elderly.
Speaking at the same event, BoT governor Sethaput Suthiwartnarueput said that when using fiscal and monetary tools, state agencies should be aware of the limits of such tools. If they execute them on an extreme basis, this could affect economic stability.
Mr Sethaput added that the state agencies should implement flexible policies and these policies should focus on the targeted groups.
A SPATE OF RISKS
Supavud Saicheua, adviser at Kiatnakin Phatra Financial Group, warned that the economy still faces a spate of risks including a fresh wave of infections in Europe which may affect Thailand's recovering tourism industry, high household debt, inflationary pressure and a relatively slow pace in innovation development.
"The new wave of infections in Europe, especially in Germany, will definitely affect the recovery of the tourism industry despite Thailand's reopening early this month," Mr Supavud said.
"The number of foreign visitors next year is unlikely to meet the target, and the government's tourism policy may have to continue banking on domestic tourism."
He said Thailand's inflation rate is also expected to rise in line with the global trend.
According to the veteran economist, Thailand's household debt will continue to rise because the economic situation is yet to expand at a normal rate and household incomes have yet to fully recover.
He cited the National Economic and Social Development Council's recent report that household debt amounted to 14.27 trillion baht in the second quarter, up 5% from 14.14 trillion baht in the previous quarter.
The figure represented 89.3% of GDP, down slightly from 90.6% the previous quarter.
Wallapa Traisorat, chief executive and president of Asset World Corp (AWC), said the outbreak represents an opportunity to adjust the standards of the company to become a lifestyle real estate investor, focusing more on quality travellers with high spending power.
In order to unlock value for Thailand, AWC is poised to develop high quality projects that enhance the competitiveness of the country as seen in the recent integrated wellness development in Klong San district, which is managed by The Ritz Carlton Hotel and aims to promote Thailand as a leading integrated wellness destination.
Mrs Wallapa said global partners will help attract high potential tourists to the country. Best practices from each brand also can be adapted to leverage the tourism industry.