His Majesty's timely lesson in prudence

His Majesty the King on Wednesday gave valuable advice to the nation amidst the debate over Thailand's monetary policy. In his words of encouragement for Bank of Thailand Governor Tarisa Watanagase and her team, His Majesty the King reminded the decision-makers that prudence is always a desirable virtue despite the human temptation to spend beyond one's means.

In his first-ever speech to focus on the monetary issue, His Majesty sent two strong messages to the nation. First, His Majesty urged the central bank to continue its sacred mission of guarding against monetary instability. Otherwise, the value of the currency and the inflation rate could be affected.

He mentioned the declining value of the baht. "In the past, Bt10 was thought to be a big amount of money. But now, Bt10, Bt100 or even Bt1,000 are perceived as a small amount of money."

His Majesty spoke to Tarisa and her delegation when central bank officials presented him the surplus income from the sale of a special banknote to commemorate His Majesty's 80th birthday celebration.

His words of wisdom are timely given the fact that the central bank has been lately under political pressure to abandon its mission to guard against monetary instability and use interest-rate policy to promote economic growth to serve short-term political purposes.

Secondly, he urged the Bank of Thailand to exercise discipline in managing the country's reserves.

"I wish that you could manage the money to a billion or 10 billion without depleting it, so that the country has money to spend. I wish you success for your hard work. I also wish that you manage it well to prevent the country from disaster."

His Majesty also said: "Now we're almost facing calamity because we're not careful with our spending. But you have been cautious. I thank you for being cautious in spending and being vigilant in managing various aspects of monetary policy."

His Majesty gave timely advice. Politicians these days tend to use the government's fiscal and monetary means to serve their short-term political purposes by, for instance, giving away easy money without proper forethought. A large amount of money has been wasted and it could hurt the country's finances. Certain populist policies lured the voters with easy money. Greed is fed by greed. State banks are asked to approve easy loans to make people feel good to boost consumption at the expense of the banks' finances. The easy money also caused people to fail to appreciate the value of hard work, vigilance and tolerance.

A survey released yesterday by the University of the Chamber of Commerce showed that an increasing number of low-income people are now struggling with debt thanks partly to the recent government's poverty assistance programme, which encouraged people to spend on unnecessary items. The government subsidised oil prices instead of asking people to maximise energy efficiency. Besides, if the funds earmarked for villages are not properly supervised, they can instead encourage rural people to borrow more to serve their material needs.

The economic crisis in 1997 provided an example for all Thais of just how vulnerable the country's finances are and the consequences of imprudence. Back then, His Majesty addressed the nation during his birthday speech, saying that "Our loss is our gain" to tell his people that the economic crisis provided a valuable lesson that Thai people should be more prudent in managing their finances and the country's economy. Otherwise, the drive to achieve high economic growth by promoting consumption beyond the country's means will severely hurt the economy and people as witnessed in 1997.

 After all, what His Majesty said on Wednesday was not novel. Being prudent and exercising discipline are timeless virtues that people should aspire to in order to make them strong and immune from external shocks. His Majesty's advice simply echoed the middle path principle of Buddhism. But some tend to easily forget. And it takes His Majesty's words of wisdom to remind the nation once in a while.