Thailand coup: Coup leader sets out economic priorities: Rice and budget
Published on May 25, 2014 5:51 PM
BANGKOK (REUTERS) - Thailand's ruling military laid out its economic priorities on Sunday, telling financial officials from the public and private sectors that it wanted to quickly pay farmers money owed under a failed subsidy scheme and work out a budget for 2015.
The army has consolidated its power since ousting the government on Thursday, detaining scores of politicians and activists whose rivalry has bedevilled the country for years, and trying to stamp out criticism with censorship and a ban on protests that an increasing number of people have defied.
On Sunday, the focus was on fixing an economy that even before the coup was stumbling into recession.
"The economy needs to recover. If there is something wrong, we have to find quick solutions," Thawatchai Yongkittikul, secretary general of the Thai Bankers' Association, told reporters, citing coup leader General Prayuth Chan-ocha, who summoned up to 60 officials to the meeting.
"The burning issues that need to be solved are the rice buying scheme and the budget plan for the 2015 fiscal year," Mr Thawatchai said.
Southeast Asia's second-largest economy shrank 2.1 percent in the first quarter of the year and there is little prospect of a quick improvement.
People are not spending, government investment has stalled and consumer sentiment fell to a 12-year low in the months before the coup.
Many countries have issued travel warnings for Thailand, which was already expecting the lowest number of foreign visitors in five years in 2014. Tourism accounts for about 10 percent of the economy.
On top of that, a huge problem for the last government of Yingluck Shinawatra was a failed rice-subsidy scheme, a major policy in a populist electoral platform that brought her to power in 2011.
The scheme was meant to cement rural support for Yingluck and her self-exiled brother, deposed former Prime Minister Thaksin Shinawatra.
But the scheme was criticised by opponents in the Bangkok middle class and royalist establishment who said it was riddled with corruption and was a cynical bid by the Shinawatras to lock in electoral success.
Farmers are owed more than $2.5 billion under the scheme and paying them would be a big public relations victory for the military.
Somchart Soithong, director-general of the Commerce Ministry's Internal Trade Department, said the military was eying 90 billion baht (S$3.47 billion) for the farmers.
"We have about 40 billion baht from the BAAC (Bank for Agriculture and Agricultural Cooperatives) and the Finance Ministry will seek loans of another 50 billion baht," he said.
A military spokesman said it was hoped farmers would begin to get paid in one or two days and every farmer would be paid in a month.
The rice scheme paid millions of rice farmers way above the market price for their grain. It boosted rural incomes but made it impossible for the government to sell the rice on the export market without incurring big losses, leading to a build up of millions of tonnes of stockpiles.
Struggling to fund the scheme and to pay arrears to farmers, the government started sales at discount late last year, driving global rice prices lower.
The scheme has cost Thailand billions of dollars in losses and the anti-graft agency indicted Yingluck on charges of negligence for her role in the scheme earlier this month.
Mr Somchart said authorities would sell rice stockpiles through auction and government-to-government contracts and he promised transparency. "These should be contracts we can explain, to get money to send back to the Finance Ministry," he said.
Mr Thawatchai also said that although "speculative" hot money had already flowed out of Thai stocks, the private sector was still confident.
"We need to work out how to boost the long-term outlook," he said. "The Bank of Thailand has already monitored the money market, while there is no problem in the capital market."
Officials will also have to scramble to get a budget drawn up. Months of unrest has put the budget allocation process on hold and delayed the disbursement of the outstanding funds for the current budget, for fiscal year ending on Sept 30.
The government normally starts working out an allocation plan early in the year but that is now months behind schedule.