Thirachai chides BOT over high interest rate

“The MPC might be stepping on the brakes too early,” Thirachai said, referring to the central bank’s Monetary Policy Committee, which has raised its policy rate numerous times over the past year to 3.5 per cent at present. The MPC needs to look beyond past statistics and take into account likely political and economic developments in Europe and the Unites States, Thirachai said.

“Plugging numbers into computer simulations is easy; gauging the future requires a sixth sense,” he said.

His comments come amid global market volatility fuelled by alternating fears of a meltdown and hopes of economic recovery in the Europe and the US. Many fear that growth is set to slow dramatically in the advanced economies in the next 12 months.

The BOT has cited inflationary pressure as a reason for past rate hikes. But Thirachai expressed concern about the impact of the severe flooding on the economy.

He said the government would soon allocate funds under the SML (Small, Medium and Large Village) scheme to villages for investment in flood management.
Small, medium-sized and large villages will get between Bt200 million and Bt300 million each, according to their size, he said.

“We may have to build concrete barriers to prevent flooding permanently,” he said. Some roads may be elevated, or tunnels built under roads to drain water, Thirachai said.
The Finance Ministry and other government agencies are braced for possible serious flooding in the South, which has so far been spared damage on the scale inflicted on other parts of the country, he said.

The minister said he had asked the Government Savings Bank and Bank for Agriculture and Agricultural Cooperatives to help communities prepare for the worst by stockpiling food and preparing boats.

Money from the Bt80-billion revolving village fund would be allocated after the floods ease, Thirachai said. Under the scheme, the government provides cash for microcredit loans within villages.

Thirachai said he would support middle managers from private firms |to help villagers develop their communities.

“The government has funds for villagers, and villagers need management and marketing support from private firms,” he said.

The minister promised tax incentives for firms that spend their own money to support consulting jobs for villagers.
Many banks said they were surveying the effects of the floods on their corporate customers on a weekly basis.

Suwat Techawatanawana, executive vice president of Kasikornbank, said about 1.1 per cent of large corporate customers were expected to be hit by the severe flooding, representing total loans of Bt3.9 billion.

The bank has a few corporate clients with factories in industrial estates in Ayutthaya province.
“[Our client] firms in the Saha Rattana Nakorn Industrial Estate are Japanese companies, which took loans from Japanese banks, not local banks. However, we are closely working with customers to help their businesses quickly,” he said.

Charly Madan, head of corporate banking at Bank of Ayudhya, said the bank was also surveying customers to determine how many have been affected by the flooding.