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(Bloomberg) — Thailand’s benchmark interest rate is “too high”, hurting people’s living standards and weighing on the economy, says Deputy Jurapun Amornbibat, who urged the central bank to consider monetary easing. the Minister of Finance said.
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“This amount is too high considering the purchasing power of the Thai people at the moment,” Jurapan said in an interview with Bloomberg TV’s David Ingles in Hong Kong on Wednesday. “I hope they understand the burden that is being placed on the Thai people and lower the fees. I hope they do so soon.”
Jurapan, who is considered one of Prime Minister Sureta Thavisin’s key advisers, has doubled down on calls for interest rate cuts made by the prime minister earlier this month. The Bank of Thailand rejected the appeal, saying the interest rate was appropriate. The policy disagreements, which began soon after Mr Sletta took office in August, risk exacerbating the baht and stock market slump.
Jurapan said that while the government recognizes BOT’s independence, it is concerned that borrowing costs remain at a 10-year high and are hampering economic recovery. He said the central bank ultimately decides the level of interest rates and the government will do its best to stimulate the economy. The next interest rate setting meeting will be held on February 7th.
Gross domestic product (GDP) growth in Southeast Asia’s second-largest economy has averaged less than 2% over the past decade, lagging behind neighboring countries. GDP growth is estimated to have slowed to 1.8% last year, even as the recovery in tourism, a key pillar of Thailand’s economy, has begun to accelerate. At the same time, consumer prices fell in the fourth quarter, reinforcing Mr. Sletta’s calls for rate cuts.
Mr Jurapan, who is attending the Asian Financial Forum in Hong Kong, said he was also concerned that the baht’s fluctuations were “too fast and unpredictable”. It is the central bank’s job to stabilize that, he said.
Mr Jurapan said the 500 billion baht ($14 billion) cash transfer plan would be delayed from its original target implementation date of May until later in the year. The plan has been held up by several issues that need clarification, including how it will be financed, but he was adamant that it will get back on track.
Jurapin said the company plans to issue local currency bonds with various maturities once legislation is enacted to fund the benefits.
“The economy is in a bad place right now,” he said. “The government therefore believes it is essential to inject funding into the system so that people can live a better life.”
The baht went from being the best-performing Asian currency in the fourth quarter to being one of the year’s biggest losers, while the benchmark stock index fell to a three-year low this week. Foreign investors will be net sellers of $719 million this year, leading to an additional $5.1 billion in outflows in 2023, according to data compiled by Bloomberg.
Mr. Suretta aims to raise annual GDP growth to 5% within his four-year term by rolling out stimulus measures to boost tourism, improve infrastructure and encourage foreign investment. Jurapun said it would be difficult to do that this year.
Tourism remains a bright spot for Thailand, with authorities aiming to soar the number of foreign tourist arrivals to 35 million from 28 million last year, Jurapan said. Of these, about 8 million are expected to come from mainland China this year, up from 3.5 million in 2023.
“We are doing everything we can to get Thailand back on its feet and achieve the 5% GDP growth rate that we want,” Mr Jurapan said.
–With assistance from Anuchit Nguyen and Biyun Song.
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