IMF executive voices support for Thai infrastructure plans

 

A top executive of the International Monetary Fund gave his stamp of approval last week to Thailand’s plans to fund, upgrade and build new infrastructure to the tune of over US$60 billion, saying top-notch infrastructure is important for sustainable development and that the Kingdom’s funding mechanisms will not pose a threat to its fiscal health.

Mitsuhiro Furusawa, the Washington D.C.-based deputy managing director of the International Monetary Fund (IMF), told the Bangkok Post newspaper that the Thai government has been exercising financial discipline and so he is confident that it will handle the infrastructure development projects and funding in a responsible manner.  He praised Thai financial authorities for maintaining prudent policies throughout the 18-year period following the 1997 financial crisis, when the Kingdom required a bail out package from the IMF.

“It is clear that infrastructure is one of the top priorities, not only for Thailand but also for many emerging economies, for sustainable growth. But to maintain fiscal health is also very important,” Furusawa said.

Thailand is in the process of launching ambitious upgrades and construction of roads, railways, ports and airports. The government recently fast-tracked 20 major infrastructure projects and said many of them will begin construction next year, with bids also being called for the remainder of them next year.

Despite this ambitious development program, Thailand has capped its public debt to gross domestic product (GDP) ratio at 60 percent, and that has proven to be a good policy that has provided financial stability, Furusawa added.

“After discussion with the [Thai] authorities, I believe they are very careful not to incur too much budget deficit or too high a [public] debt-to-GDP ratio. Those infrastructure projects will be implemented through PPPs [public private partnerships],” Furusawa told the Bangkok Post in an exclusive interview.

Furusawa visited Bangkok last week and met with Deputy Prime Minister Somkid Jatusripitak, Finance Minister Apisak Tantivorawong and Bank of Thailand governor Veerathai Santiprabhob for a “frank exchange of views.” He said that he did not give any policy recommendations to the Thai officials.

Thailand’s public debt as of September 30 was $160 billion or 43 percent of GDP. According to an estimate by the Public Debt Management Office, public debt would peak at 49.9 percent of GDP in fiscal 2018 if private sector joint investment through PPP schemes accounted for 17 percent of infrastructure investment. If the government relies solely on borrowing, public debt will peak at 51.2 percent in fiscal 2018.