Thailand's economic situation is worse than expected and the Bank of Thailand (BoT) is being urged to cut interest rates on commercial bank loans to reduce the burden of small and medium-sized enterprises (SMEs).
"The Bank of Thailand needs to realise the real problems people are facing as their income remains stagnant whereas their expenses and debts increase. Many people have to rely on informal debt that requires paying high interest rates. The government must intervene to help solve this problem," said Pichai Naripthaphan, deputy chairman of the Pheu Thai Party's strategies and politics committee and an advisor to Prime Minister and Finance Minister Srettha Thavisin.
Mr Pichai said Thailand's economic expansion in the fourth quarter of 2023 stood at 1.4%, according to the Fiscal Policy Office.
"Thailand's economic expansion for 2023 was only 1.8%, which is considered very low," he said.
Mr Pichai said this year's economic growth will also not be in a good shape without government intervention and new approaches.
He referred to a Reuters interview with the central bank's governor last week in which the governor said growth had been slower than expected but the economy was not in crisis as the government had portrayed.
"But I would like to ask the [central bank] governor if it is a crisis to see the country grow less than projected for 10 consecutive years?" Mr Pichai said.
He also noted that when Sethaput Suthiwartnarueput took up the position of governor of the central bank in 2020, Thailand had not yet recovered from negative growth that year.
He said that in 2020, economic growth came in at minus 6.1%, and the figure only went into positive territory in 2021, 2022 and 2023, growing 1.6%, 2.6% and 1.8%, respectively.
"Combining the growth over the past three years resulted in 6%, far lower than the negative figure in 2020," Mr Pichai said.
"This means the economy has gone nowhere in the past four years. If I were the [central bank] governor, I would be worried and disappointed, as most other countries saw much higher growth in 2021."
He pointed out that even Vietnam had enjoyed more than 20% growth in 2021.
"If the [central bank] governor does not think this is problematic, then he should change his way of thinking," Mr Pichai added.
Mr Pichai proposed that the central bank reduce interest rates on commercial bank loans to reduce the burden on SMEs and entrepreneurs.
"Reducing lending rates of the commercial banks should be expedited through the Financial Institutions Policy Committee," he said.
"The central bank must not encourage the profitability of commercial banks at the cost of the burden on SMEs. The profits of commercial banks of more than 220 billion baht accounts for more than 1% of GDP," he said.
The advisor to the prime minister also said liquidity issues in the financial and banking systems could bring the economy down further this year.
"What measures has the central bank taken to cope with this liquidity crunch?" said Mr Pichai.
He also called on Mr Sethaput to see if the central bank's decisions on financial policies, interest and exchange rates had been made with the end goal of boosting economic growth in mind.