Govt can handle effects of European crisis

Senior officials yesterday expressed confidence in the government's ability to minimise the impact of the European debt crisis on the Thai economy, saying it is ready to spend more if necessary.

The central bank and the government are closely monitoring the situation and if necessary the government is ready to revise some projects to facilitate more spending, Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong said yesterday.

Economic ministers and Kittiratt met with Prime Minister Yingluck Shinawatra yesterday to discuss the deepening crisis in Europe, which some fear will have grave consequences for Thailand.

"We have gone through two major economic crises in 1997 and 2008. Many measures have been implemented; some worked very well, others didn't. There are other measures that have not yet been implemented, but we'll do so if there's serious trouble," Kittiratt said.

Textile exports have been hit due to declining purchasing power in Europe, but other export items have not been affected, he said. While the number of tourists from some troubled countries may drop, numbers from other countries have increased, the deputy prime minister said.

The Central Bank has also offered assurances that local banks are sound, as their exposure to the European financial system is limited. Thailand is not facing the liquidity crunch seen in other parts of the world, he said.

And while there have been some capital outflows, that money could easily flow back into the Kingdom if the country manages to create confidence, Kittiratt said.

He said he did not want to talk too much about the European crisis since he was afraid the public might worry about the contagion effect.

Meanwhile, Somchai Sujjapongse, director-general of the Fiscal Policy Office, said the government had run a fiscal deficit of Bt495.57 billion in the first eight months of the current fiscal year, from October to May. The government borrowed Bt189.54 billion to finance the deficit. At the end of May, the government had treasury reserves of Bt215.25 billion, he said.

Government revenue in May missed the target by Bt36.67 billion, due largely to the impact of the devastating floods last year. It was the first month of the current fiscal year in which government revenue missed the target, he said.

However, the government still collected more revenue than targeted in the first eight months, he said. Revenue from October to May was Bt1.29 trillion - 0.1-per-cent higher than targeted and up 1.5-per-cent year on year.