IMF sees appropriate monetary policies in Thailand

BANGKOK, June 18 (TNA) - The International Monetary Fund (IMF) says that the Bank of Thailand (BOT) has implemented suitable monetary policies to support the Thai economy, which is, thus, likely to grow by 4.75-5.25 per cent in 2013 and 2014 respectively. According to a report on the Thai economic assessment by an IMF delegation, headed by Luis E Breuer, which was released by the BOT on Tuesday, the Thai economy was found to be able to cope with past risks, including the global financial crisis and the severe flooding in Thailand in 2011, thanks to the country's strong economic fundamentals, financial discipline, strong commercial banks and businesses, high foreign exchange reserves and a manageable level of public debts. The IMF delegation, therefore, predicted that the Thai economy should expand by 4.75-5.25 per cent this year and next year respectively, boosted mainly by demand in the local private sector and accelerated spending by the government, but it cautioned that the Thai government should be ready to change its policies to cope with inflation. The IMF delegation also viewed that Thailand's domestic political stability supports international investors’ confidence but capital movements remain as a risk factor of the national economy. As the Thai economy is recovering, the IMF delegation suggested that the government gradually reduce its economic stimulus measures to enhance its financial capability to support new infrastructure development projects and to cope with future economic uncertainty. The IMF delegation also backed the Thai government’s policy on maintaining its financial discipline by limiting public debts at no higher than 50 per cent of the country's gross domestic product (GDP) and on targeting a balanced budget by 2017, noting that the government’s plan on increased taxation and control in its spending should help accomplish the goals. However, the IMF delegation expressed concerns over Thailand's expanded roles of specialized financial institutions (SFIs) and growing household debts, partly resulted from post-flood repair and short-term consumption stimulation policies. The IMF delegation also supported the Thai government's infrastructure development plans, especially in the transport sector, for the sake of inclusive growth, calling, nonetheless, for transparency in spending outside government budgets and the operations of state enterprises and SFIs. Besides, the IMF delegation urged the Thai government to help people by sponsoring educational and health development for the sake of sustainable and fair economic development. (TNA)