Speaking to a gathering of governors, Somkid said economic performance in the first quarter was quite satisfactory, thanks largely to the momentum carried over from last year.

Anticipating the new election, he urged the CEO governors to go to the grass-roots level of society by pushing the Otop (One Tambon One Product) project to bring in more foreign exchange, in order to compensate for the current-account deficit.

"I am concerned the trade deficit will continue to rise in the future because of the rise in oil prices," he said.

To lessen the impact of escalating fuel prices and the ongoing political uncertainty and to ensure continuous economic momentum in the remaining months, Somkid has instructed the 75 CEO governors to energise the rural economy by accelerating budget spending.

Meanwhile, the Finance Ministry plans to announce the latest revision of economic figures on May 30.

The ministry originally predicted the economy would grow within a range of 4.5 to 5.5 per cent this year. However, Naris Chaiyasoot, director-general of the Fiscal Policy Office, said the projected growth rate had yet to take into account the current oil price hike and political instability.

Rural voters are the main supporters of the Thai Rak Thai Party, which has advocated populist policies to drive up domestic consumption.

Somkid said the delay in the run-up to the new election may decrease both domestic consumption and foreign investors' confidence. He therefore stressed the need to create an environment that will encourage people to spend and invest in Thailand.

About Bt30 billion of the budget has been earmarked under the CEO governors' project, but only 10 per cent has been paid out so far this fiscal year.

All budgets should be distributed within this fiscal year in order to ensure the community-level economy is driven in the right direction, Somkid said.

He added that the country would inevitably post a trade deficit this year, mainly due to the rise in oil prices.

In the first quarter, a trade deficit of US$404.2 million (Bt15.4 billion) was recorded, but the current account was in surplus to the tune of $1.62 billion, the minister said. Tourism, exports and a boost in investment should lessen pressure on the current account.

All relevant agencies - the Interior Ministry in particular - and the private sector should focus more on developing the rural economy instead of only focusing on routine administration, said Somkid.

In addition, the government plans to develop Otop villages as tourism centres, an initiative it hopes will bring in more income.

In the first stage, the government will select 60 villages from among the 76,000 nationwide with the aim of attracting tourists to rural areas. All provinces have to select their own top three premium Otop products, which must be unique, to draw tourists to the community. The villages must also prepare tourist attractions.

Somkid said that making each community well known for a specific product would attract more tourists.

Meanwhile, in a bid to cushion consumers against rising prices, the government will launch weekend markets once a month, simultaneously in every province.

The first weekend market is planned for June 1-3 and will sell low-priced goods and Otop products in an attempt to help local people combat higher living costs.

Petchanet Pratruangkrai

The Nation