The finance permanent secretary says the new issue of 100 billion baht worth of government bonds for provincial development will help stimulate the economy. PATTARACHAI PREECHAPANICH
The Thai economy has the potential to grow as much as 5% next year if the government achieves its goal of attracting more private investment, says a senior finance official.
Somchai Sujjapongse, the finance permanent secretary, said the government's plan to issue 100 billion baht worth of government bonds to finance provincial development and stimulate the economy is expected to spur private investment worth 200-300 billion baht next year.
Deputy Prime Minister Somkid Jatusripitak said on Wednesday that the government would issue 100 billion baht worth of government savings bonds by January to raise cash to finance development in provinces nationwide, to be divided into 18 clusters.
The new bonds with a maturity of five to seven years will be offered to the general public and institutional investors and will help offset the impact of poor global trade prospects.
Mr Somchai said active investments by the government and state agencies will help induce the private sector to rev up investment.
State-owned enterprises are projected to invest 300-400 billion baht in the year to come, with government investment estimated at 540 billion.
"We expect Thailand's economy could manage growth of 4-5% next year if the combined investment budgets from the government, state enterprises, the new government bonds to fund provincial development and ensuing private investment happen as predicted," Mr Somchai said.
Finance Minister Apisak Tantivorawong said the government's planned 100-billion-baht bond issuance will be a catalyst for Thailand 4.0, the value-based economy initiative.
Proceeds from the bond offering will be used in the provincial cluster scheme to sharpen Thailand's competitive edge, he said.
The government, according to the original plan, would use the 2018 fiscal budget to finance the local economic development scheme. But it was switched to the bond offering as the government was worried about a delay in the project's outcome, Mr Apisak said.
The 100 billion baht for the bond offering will be borrowed from the domestic market as the country has excessive financial liquidity of almost 3 trillion baht, he said.
The government can run up 220 billion baht in debt in addition to the 390-billion-baht borrowing plan to offset the fiscal 2017 budget deficit, he said.
Section 21 of the Public Debt Management Act puts the Finance Ministry's maximum borrowing at 20% of annual budget expenditures, with 80% of the budget set for principal repayment that fiscal year.
Theeraj Athanavanich, deputy director-general of the Public Debt Management Office (PDMO), said the country's debt-to-GDP ratio might remain unchanged after the bond issuance if the spending can boost economic growth as expected. The PDMO earlier estimated the ratio would swell to 45.5% at the end of fiscal 2017 from 42.7% the previous year.
The borrowing plan represents less than 1% of the country's GDP of 14 trillion baht, Mr Theeraj said.
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