Transparency critical in Bt2-tn project: Prasarn
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THE BANK of Thailand has lined up squarely behind the government's Bt2-trillion mega-infrastructure project to enhance the country's economic potential, but wants it to be implemented with transparency and keep public debt at a manageable level.
“It’s not necessary to drive the Thai economy by consumption now,” as private spending is already high, Governor Prasarn Trairatvorakul told a seminar on the “Thai Economy, the Global Economy and Thailand’s Future” on Tuesday.
Public investment could promote the economy with more stability and sustainability, he said.
However, if such a large project is worth the investment, but has no transparency, it could cause a capacity loss.
State on- and off-budget investment could push public debt up to 60 per cent of gross domestic product from the current level of 44 per cent of GDP.
However, the important point is that if the project improves productivity and increases revenue for the government, it will make GDP larger and that would bring the public-debt-to-GDP ratio back down.
Now the country’s revenue collection capability is low compared to the economy’s size.
“We have to improve revenue collection,” he said.
Estimates of economic growth of 4 per cent for this year were approaching the performance of the economy, which is expected to grow about 4-5 per cent.
“If the Thai economy will grow 6 per cent, we have to look through our workforce, transportation, energy use. Therefore, I agree with the Bt2-trillion project but with investment worthiness and transparency,” he said.
In response to the US Federal Open Market Committee meeting yesterday, he said the Thai central bank tries to keep economic balance by warning Thai businesses to undertake foreign-exchange risk management and not to have too open a forex position.
“There are FX risks due to its two-way movement. We always warn businesses to be aware of FX risks. It’s a must,” he said.
