Subsidy burden 'means govt must act carefully'
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The Senate committee on finance, banking and financial institutions has advised the government to carefully plan its economic strategies, as it has laden itself with a burden of well over Bt500 billion from its populist policies.
Senator Witawad Boonyasatid, who leads the panel, has done a report on concerns about populist policies and their impact on national debt. It will be presented to the Senate soon.
The report says the government depended on a reduction in interest rates to boost the economy – and that reflected inefficient financial policies.
The populist policies that aim to provide opportunities for the poor to gain access to financial sources such as a debt moratorium or credit cards for farmers. These put restraints on financial moves and the macro economy. And other measures including the hike in the minimum wage also distort market mechanisms, causing higher business costs and hurting competitiveness in the long run.
A Bank of Thailand study showed labour intensive industries saw a drop in profit of up to 35 per cent, while small and medium-sized businesses were affected too, the report said.
The committee urged the government to boost investors’ confidence and increase state investment. Successful management of mega-projects such as the flood and water management scheme would boost confidence. However, the government should always keep financial stability in mind.
Besides providing populist policies to help targeted groups, the government should use populist policies to promote savings to balance the nation’s deficit, the report said.
