Prime Minister Srettha Thavisin says he will meet with Bank of Thailand Governor Sethaput Suthiwartnarueput on Wednesday to discuss a range of issues, a day after prodding the central bank to consider lowering interest rates.
The two plan to talk about the digital wallet programme proposed by the government to stimulate the economy by handing out 10,000 baht each to about 50 million Thais, Mr Srettha told reporters on Tuesday.
The risk of corporate bond defaults will also be among the topics for discussion, he said, without specifying if he would press the governor to cut interest rates. Reports on Monday that the SET-listed contractor Italian-Thai Development Plc was looking to delay principal payments on 14.5 billion baht in debentures rattled the market.
Mr Srettha, who is also the finance minister, on Monday urged the central bank to lower interest rates in view of a three-month streak of negative inflation readings. He said high interest rates were hurting the economy, especially small businesses and low-income groups.
“There might be disagreements, but there must be a conversation,” he said, adding that the meeting with the central bank chief was a routine discussion.
While the BoT did not respond to the prime minister’s request, its Monetary Policy Committee has hinted at an extended pause to avert any potential shocks to the economy and the financial system amid an uncertain outlook.
The BoT, which in November left its policy rate unchanged at 2.50% after eight straight increases, will next review the rate on Feb 7.
Consumer prices have been in deflationary territory for three months through December, with the latest data printing a negative 0.83%, prompting some economists to see rising odds of a rate cut later this year.
Mr Srettha also said the government would push ahead with the digital cash handout with a plan to disburse the money in May. He said he would seek to persuade Mr Sethaput about the merits of the plan, about which the central bank governor has expressed reservations in the past.
The Council of State, which advises the government on legal matters, has said the government is within its rights to introduce a bill to borrow 500 billion baht to fund the cash handout. The council does not have authority to approve or reject government programmes but can only offer legal opinions.
The move to borrow has triggered a backlash, including from opposition parties, some former central bankers and economists on concerns that move may widen the fiscal deficit and stoke inflation.
“We must discuss issues that we disagree about as the situation has changed a lot,” Mr Srettha said. “It’s my duty to persuade him that the situation has changed. It’s normal for people living together to have discussions.”
The premier is aiming to accelerate annual growth in Thailand that has lagged neighbours and averaged below 2% in the past decade, to 5% during his term.
Last week, the House of Representatives passed the first reading of a 3.48-trillion-baht budget plan for the 2024 fiscal year through Sept 30.
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