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Thai government on spending spree to boost support |
| Time:2008-6-19 8:17:00 From: |
Facing a sustained protest on the streets of Bangkok and shaky public support, Thailand’s four-month old government is trying to shore itself up with handouts to everyone from rice farmers to truckers.
The latest plan from Finance Minister Surapong Suebwonglee is a cash giveaway to the poor for basics such as food and fuel, both of which have risen steeply this year, pushing inflation to a near 10-year high.
Under the scheme, which could start as early as next month and last up to a year, the country’s poorest people would get between 300 baht ($9.05) and 400 baht per month, Surapong said.
While praising the intention to help the poor weather the potentially stormy times, economists said the handouts could fall victim to the deep political divisions plaguing the country.
"The criteria for the qualified people must be made very clear," one economist at a commercial bank said. "The project must not benefit only canvassers of certain politicians."
Long term, the plan and other populist schemes could hurt the government’s fiscal position, still at a comfortable level, analysts say.
Thailand is running a budget deficit of 1.8 percent of gross domestic product (GDP) for the October 2007/September 2008 fiscal year, up from 1.5 percent in the previous year. It plans to raise this to 2.4 percent in the next fiscal year.
"Though the budget deficit to GDP ratio is low, public debt to GDP may rise significantly in the medium term if the government continues to spend heavily on populist projects and fails to meet its revenue target," said economist Charl Kengchon of Kasikorn Research Centre.
Public debt has been on a very gradual upward trend this year to 36.85 percent of GDP in March versus 36.30 percent in January. By contrast, in the months after the 1997 financial crisis, public debt amounted to 60 percent of output.
With global oil prices at record highs, the government is under pressure from everybody from bus companies to garlic farmers. In nearly every case, those who have protested have received a bail-out.
On Tuesday, cabinet approved a 25 billion baht ($756 million) scheme to shore up the price of rice paddy.
Last month, the energy ministry ordered four state-run refineries to sell diesel to Bangkok bus firms at an 8 percent discount to pump prices. Truckers are now demanding the same.
Despite all this, the popularity of firebrand Prime Minister Samak Sundaravej, who admits he is proxy for ousted prime minister Thaksin Shinawatra, has never topped 50 percent in opinion polls during his four months in office.
"The prime minister needs to show he has full command of running the country," Noppadon Kannika, chief pollster at Bangkok’s Assumption University, said after support for Samak rose to 48.5 percent this month from 45.3 percent in March.
"He needs to improve his performance to preserve the stability of his government," Noppadon said.
($1=33.15 baht)
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