Thai PM says stimulus programmes will prevent deflation
Prime Minister Abhisit Vejjajiva yesterday said Thailand is unlikely to encounter an economic deflation, due to the government’s plan to inject 800 billion baht into the country’s economy through its economic stimulus programmes.
Abhisit said he believes that after the government invests such a huge amount of 800- billion-baht budget through various stimulus programmes, domestic consumer prices would be supported as the funds could generate more employment and money would circulate in the system.
Therefore, the premier said, the economic deflation will not occur, adding that the government has opted to borrow funds to finance a wide range of stimulus programmes instead of letting money remain idle in the banking system.
The Parliament last month approved a Royal decree and a bill allowing the Ministry of Finance to borrow 800 billion baht to finance programmes to shore up Thailand’s domestic economy.
Abhisit’s remarks were made after the Ministry of Commerce Ministry on Wednesday said Thailand’s headline inflation contracted four percent in June from the same period last year, falling for six consecutive months.
The ministry said the month’s core inflation index, excluding fresh food and fuel costs, fell 0.1 percent from the same period last year but rose 0.2 percent from the previous month.
The ministry has projected inflation during the entire 2009 to be between 0 to 0.5 percent, despite a decline of 1.6 percent in consumer prices during the first half of this year.
Meanwhile, Dr.Somchai Sujjapongse, director-general of the Ministry of Finance’s Fiscal Policy Office (FPO), yesterday said the government has urged budgetary disbursements and spending in an effort to support economic recovery and to ease the slowdown in the nation’s economy.
Dr.Somchai said the government had a budget deficit of some 498 billion baht during the first eight months of the current fiscal year, from October last year till May this year, since it tried to stimulate the economy while it had a cash balance deficit of 480.87 billion baht or about 5.3 percent of the gross domestic product (GDP), resulting in fiscal reserves of 101.72 billion baht which reflects the stability of the government’s fiscal position.
The government, he said, had successfully managed the cash supply in response to the cash demand as it had offset the deficit by issuing bonds, promissory notes and fiscal bills valued at about 353.53 billion baht to save on interest.
However, he said, the government had in the process spent 127.34 billion of the fiscal reserves, resulting in the fiscal reserve as of the end of May to stay at 101.72 billion baht.
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