THE government needs to urgently tackle its high levels of household and public debt, and focus on policies that can propel the country’s growth rate to match some of its South-East Asian neighbours, according to former prime minister Thaksin Shinawatra.
A debt restructuring initiative to cover the households and businesses should be undertaken as “Thailand and its people are trapped in debt,” the two-time premier and father of newly elected leader Paetongtarn Shinawatra said on Thursday in a talk titled “Vision for Thailand”.
The finance minister and others should take the lead in addressing the chronic debt burden along with the central bank, Thaksin, seen as the de facto chief of the ruling Pheu Thai Party, told a gathering of more than 1,400 bankers, business executives and politicians in Bangkok.
The event marked the first anniversary of Thaksin’s dramatic return to Thailand from a self-imposed exile after he fled corruption charges in 2008.
While Thaksin is unlikely to assume any official or political position in the new government, he’s expected to wield considerable influence on Paetongtarn administration’s policies. A popular and polarising figure in Thai politics for over two decades, his years in power saw populist policies dubbed as “Thaksinomics” to drive economic growth. He introduced a debt moratorium for farmers, fuel and electricity subsidies and a universal healthcare scheme that propelled annual growth rate to above 5%.
Paetongtarn, who is still in the process of finalising her Cabinet, faces the challenge of reviving an economy stifled by a near record-house hold debt, sluggish exports and the high cost of living. While her predecessor Srettha Thavisin pushed ahead with a US$14bil (RM61.2bil) cash handout to shore up growth from a decade of average sub-2% growth, she’s ordered a review of the payout amid concerns of legal challenges to the controversial plan.
Thailand’s household debt has soared to almost 91% of the nation’s gross domestic product and has been seen as one reason behind the central bank’s reluctance to reduce interest from a decade high 2.5%. As the key rate remains high, a reduction in the bailout fee paid by commercial banks may be explored to ease the burden on those struggling with car and housing loans, Thaksin said.
The billionaire politician said the government should respect the central bank’s independence and opt for more talks with it on lowering interest rates.
He said greater coordination between fiscal and monetary policymakers was needed to address Thailand’s economic problems. — Bloomberg
