Thailand’s ex-central bank chief endorses national reserve spending for mega projects

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BANGKOK, Oct 10 – Former central bank governor Pridiyathorn Devekula has thrown his support to a move to partially transfer Thailand’s international reserves to set up the national wealth fund for investment in the government’s Bt2 trillion infrastructure development.

Mr Pridiyathorn, formerly deputy prime minister and finance minister, was referring to a proposal by Ampon Kittiampon, chairman of the Bank of Thailand (BoT) board of directors, to invest in Thai government bonds and mega projects through the national wealth fund.

According to Mr Ampon, investment capital for the wealth fund would come from the country’s international reserves.

Mr Pridiyathorn said the idea was proposed by central bank governors and finance ministers in several previous governments but it would not materialise unless the Bank of Thailand Act, B.E. 2551 (2008) is amended.

Thai government bonds are more secure than those of other countries and the interest rate is higher, he said, but indicated that Mr Ampon must be clear on which parts of the international reserves he wants to withdraw and how much.

The country’s reserves are at US$200 billion and consist of two accounts – US$140 billion in the management account and US$60 billion in the bond issuance account.

There should be no problem if about US$30 billion is taken from the reserves, he said.

Mr Pridiyathorn said he believed the US would successfully expand its debt ceiling before the October 17 deadline – a move that will contribute to US economic restoration.

US and European economies are showing sign of gaining strength while China and Japan are also springing back, he said.

He predicted a positive sign for Thailand’s exports in the final quarter of the year and next year, and consequently expanded domestic consumption.

The former finance minister, however, urged the government to speed up disbursement of the 2014 budget and execution of the Bt2 trillion investment for infrastructure development.

If the bill to borrow Bt2 trillion is rejected by the Constitution Court, the government can switch to deficit budgeting at Bt70-80 billion, or seek additional borrowing at Bt200 billion under the law which empowers the Finance Ministry to acquire loans for economic development, he said.