March 18, 2013, at 1140hrs, at the Government Press Center, Naree Smosorn Building, Government House, the Government Spokesman Tosaporn Sereerak gave a statement about the opposition leader’s concern and disagreement on the Government’s 2.2 trillion Baht loan for investment on transportation infrastructure development, which the opposition leader claimed it would incur public debts that could take no less than 50 years to pay off. According to the Spokesman, the Government had capacity and capability to manage the loan including the settlement of debts and expected to pay all debts back in full. Furthermore, the current situation was timely for the loan since interest rates in the US, Japan, and Europe was at the lowest point of economic cycle as various countries were running on the easy monetary policy in order to stimulate economy. As a result, interest rates in both monetary and capital markets around the world and domestic bond market became low. Even though interest rate of national strategic debt was higher than that during the American financial crises in 2008 and 2009, the 5-7 year borrowing cost at present was still lower.
In addition, Thai Baht’s strength helped reducing cost of imported products. Excess domestic liquidity was still in a high level. Thailand had not been investing on capacity building for the expansion of economy for quite a while. Meanwhile, the Government had constantly been monitoring and assessing global economic situation and was well aware that the expansion of global economy was still limited. Therefore, priority was now with the domestic demands, particularly in the area of investment. Furthermore, there had been evidences of successful investment projects during the crisis period or during the recovering period of the global economy, for example, IFEZ project, a large-scale investment project of South Korea which was implemented during the global economic crisis in 1997, or Thailand’s own Eastern Seaboard project which was implemented right after Thailand encountered trade crisis.
The Spokesman also added that at present, the country’s public debt is at 44% of GDP. The Government would ensure that strict fiscal discipline would be practiced and confirmed that the public debt would not exceed 50% of GDP within the next 7 years. The 2.2 trillion Baht loan was not, however, a one-time loan, and was an income generating investment as well as to reduce logistics cost which had long been an unsolved problem. Due to the lack of investment on infrastructure development, Thailand had been listed low in the ranking of World Economic Forum (WEF), and the International Institute for Management Development (IMD). However, Fitch IBCA had upgraded Thailand’s rating to BBB+ after the Government’s announcement of the investment plan which reflected its confidence in the investment project of Thailand.