BOT: Abhisit Government‘S Economic Campaign Will Benefit Economy; Banks Should Lower Lendi

Published : May 08, 2009 :: 11:05:28 [ 107 views ]

BOT: Abhisit Government‘S Economic Campaign Will Benefit Economy; Banks Should Lower Lendi

BANGKOK, May 8 - Plans by the government of Prime Minister Abhisit Vejjajiva to invest Bt1.43 trillion on the second round of its economic stimulus campaign aimed at spurring growth will benefit the economic system, Bank of Thailand (BoT) Governor Tarisa Watanagase said Thursday.

Mrs. Tarisa told participants attending a seminar that it is now depends on the government to determine whether it can actually invest in the projects agreed by the Cabinet on Wednesday.

If the investment in the economic stimulus campaign is implemented as planned, it could help cushion the contractions in the Thai economy to only 3.5 per cent as projected by the government earlier, she said.

On concerns that the government must borrow Bt800 billion to finance the projects considered in the campaign, Mrs. Tarisa said it will not hurt the private sector as its level liquidity now exceeds Bt1 trillion while businesses have slowed investment due to the economic sluggish climate.

Mrs. Tarisa said that political unrest in Thailand is a major factor eroding investor confidence, especially that of foreign investors. Foreign direct investment (FDI) entering Thailand is between US$600-700 million monthly now, down approximately US$100 million from before, which is still not worrisome as it is in line with the global economic slump.

If domestic political unrest has returned to normal and the world economy improves, FDI will return to Thailand as before, she said.

Regarding local commercial banks still reluctant to lower lending interest rates–despite the central bank cutting its key interest rate by 25 basis points to 1.25 per cent on April 8 in an attempt to help boost Thailand’s economy, Mrs. Tarisa said banks should consider cutting lending rates without lowering deposit rates.

It is now an appropriate time for banks to cut their rates as the demand for loans has declined, she said. (TNA)