BANGKOK, Oct 15 – The creation of a national wealth fund for Thailand would be premature given the volatility in the global money market, according to a World Bank economist.
Kirida Bhaopichitr, senior economist of the World Bank, said the timing is not right to form a national wealth fund in the next few years but it would be appropriate to study the matter for implementation when the global economic situation and money market are more stable.
A wealth fund for Thailand is not a new idea and it has been raised several times with the intention to apply international reserves on overseas investment, she said.
In the present situation of rapid capital flows and monetary volatility, it is necessary that Thailand retain the international reserves to cushion the baht, she said, indicating that foreign investors are more confident in dealing with a country having high international reserves.
Thailand must keep an eye on the impact of the US economy on the kingdom in the remaining months of this year, and the inefficient US handling of its own economic problems will affect global economic growth, she said.
It is believe, however, that the US is capable of extending its debt ceiling before the Thursday deadline, two days from now, she said.
Regarding the World Bank’s assessment that the Thai government would lose Bt150-200 billion annually from the rice pledging scheme, Ms Kirida said the government was obliged to totally release rice from its stockpiles, or the loss would be inevitable.
The government has spent 10 per cent more than the entire budget and it is necessary to reduce allocations for other agencies, or it must seek loans to add to the national budget, she said.
The scheme has diminished the government’s opportunities in developing other sectors and created long-term disadvantages to agricultural development especially regarding rice, she said.