Water-plan delay warned

The Bank of Thailand yesterday said that a delay in the implementation of the proposed water-management projects will affect the overall economy, but to a lesser extent than the impact from a slowdown in China. 

Mathee Supapongse, senior director of the BOT’s Macroeconomic and Monetary Policy Department, said that proposed investments under the project carried a small weight in the BOT projection. However, as none of that may happen this year, it could affect the 2013 economic forecast.

The BOT’s Monetary Policy Committee is set to review the forecast at the July 10 meeting. The Finance Ministry this week cut the projection from 4.8-5.8 per cent to 4-5 per cent. The BOT’s current projection is 5.1 per cent. Asian economies are expected to experience slower growth, mainly due to China’s slowdown.

“China’s economic slowdown is the key focus in the review,” Mathee said. “We have been conservative concerning China’s growth. Earlier, we expected the growth rate at around 7 per cent,” he said.

Having expanded at more than 8 per cent per annum for decades, China is bracing for slower growth this year. 

Deputy finance permanent secretary Pongpanu Savetarundra also said the delay in implementation of the water projects would affect the economy. The flood disaster in 2011 exposed the poor water management and the need for an integrated system. The investment in the water projects is crucial to boost the domestic economy, which is pressured by global uncertainties, he said.

In its forecast of a 4.5-5 per cent economic growth this year, Siam Commercial Bank had also factored in the proposed investment under the water-management plan. Amid greater downside risks due to global financial volatility and weaker private spending, it said public investment, especially for the water management projects, is expected to be launched in the second half of the year and, coupled with export recovery, should keep the economy afloat. 

Pongpanu believes the Finance Ministry’s loan facilities for the project are not in violation of the court’s order and they were secured according to proper procedures. The loan facilities had got the endorsement of the Cabinet and the Budget Bureau. 

He stressed that it was necessary to secure the six-year facilities (2013-2018) before the borrowing decree expires this month. Interest burden will materialise only when the money is disbursed. If there was no disbursement, the borrowing will be scrapped without incurring a penalty fee, he said.