Bt350-billion loan will be converted to bonds later

  
 
Areepong Bhoocha-oom, permanent secretary for Finance, said the ministry was ready to go ahead with the plan now that the Constitution Court has ruled in favour of the executive decree.
“We expect to borrow from the money market in lots of Bt30 billion to Bt60 billion by issuing promissory notes in keeping with the progress of the projects before converting these loans into long-term bonds in order to save on interest costs,” Areepong said.
The government committee on water-resource management is expected to send details of projects to the ministry soon. Finance Minister and Deputy Prime Minister Kittiratt Na-Ranong had previously said that the government would first invest on building concrete barriers along riverbanks before marking off sites for water catchments and floodways.
However, Somchai Sujjapongse, director-general of the Fiscal Policy Office, said the additional public spending of Bt350 billion would boost the economy, especially after it was hit so badly by last year’s floods. Government spending is also expected to boost GDP by 5 per cent this year, up from 0.1 per cent last year, even though the loan will cause public debt to rise significantly.
However, he said, having public debt at 47 per cent of GDP was manageable because it was well below the 60-per-cent target the ministry had set in order to maintain fiscal sustainability. “We have room to borrow as much as Bt2 trillion before reaching such an alarming debt level,” Somchai said. The government also plans to bring the country’s fiscal deficit down to Bt300 billion from the current Bt400 billion in the next fiscal year.
Large amounts of public spending might increase inflation, but it will not pose any threat to the economy because the central bank should be able to keep things under control, he added. The National Economic and Social Development Board, a national think-tank, believes that public investment will boost economic growth this year and has forecast GDP growth rate at 5.5 to 6.5 per cent, though headline inflation rate may rise to 4 per cent, up from 3.8 per cent last year.