Stimulus to boost growth

The government yesterday launched a Bt324.47-billion three-month stimulus package in the hope that this will help rev up the economy for the rest of the year through two urgent measure – job creation and income augmentation for rice farmers.
This effort comes as Fitch Ratings halves its forecast for gross-domestic-product growth to 1.2 per cent this year, while the World Bank plans to lower its forecast from the 3-per-cent level it predicted in June after seeing private investment, exports and consumption all taper off.
The stimulus budget is mostly pending budgets from previous fiscal years that will be allocated to mainly maintenance, not investment projects, that have already been lined up by various ministries.
These include the repair of public school and hospital buildings as well as main roads that were damaged by floods throughout the country.
“As for the stimulus package, the first focus will be on maintenance. We will not concentrate on building, since we have to figure out if it’s worth it,” Prime Minster General Prayut Chan-o-cha said at Government House.
“The first measure is aimed at creating jobs, creating income and spurring the economy through the increase of capital flows. The second measure is aimed at supporting farmers with low income, such as rice farmers … I understand that many groups are suffering [economically] but we have to fix the problems one by one, and the rice farmers’ problems have been prolonged,” he said.
Deputy Prime Minister Pridiyathorn Devakula said the government expected that the two measures would create a multiplier effect that would immediately jump-start domestic consumption. However, the measure aimed at increasing income for farmers was not a populist policy since the appointed regime was not trying to win votes, he said.
The government will especially concentrate on the disbursement of the Bt23 billion in reserve budgets from 2012 and 2014 that include Bt15 billion left over from the “Strengthening Thailand” project, since most of the schemes under this budget are smaller ones that can start immediately.
This means that the hiring process could begin right away, Pridiyathorn said.
The 2014 fiscal budget would be extended to December for all ministries to complete the hiring process for their investment projects within the three months, he said.
“The disbursement of only 20 per cent of the leftover investment budget worth about Bt147 billion in 2014 should be sufficient to stimulate the economy in the next couple of months,” he said.
All ministries would be able to disburse about Bt129 billion from the Bt419-billion 2015 investment budget in the first three months of fiscal 2015, while all the urgent projects have been identified and approved, he said.
The government will set up a committee to monitor the investment projects and the disbursement of pending fiscal budgets in every province, while the subsidy for rice farmers will be provided to those registered with the Bank for Agriculture and Agricultural Cooperatives.
The funds should begin to be transferred to farmers’ accounts by October 20, he said.
Rice farmers need the most help because their annual income is much less than that of factory workers.
“This is not populist policy since we do not want votes. Right now we want to simulate the economy, and the economic stimulation process should be implemented in the right areas, those that have the biggest problems and burdens,” he said.