Thailand: Bank of Thailand governor sees stronger fiscal role for recovery

  • Outgoing Bank of Thailand Governor Veerathai Santiprabhob said public debt restrictions should be eased to allow the government to spend more as monetary policy options dwindle with interest rates already at an all-time low.
  • Given the severity of the pandemic-driven downturn, the governor said his “personal view is that the 60% public debt-to-GDP limit can be relaxed.” The limit was set up during “normal times” and the level isn’t high compared to other emerging markets, he said on 8 Sep 20 in an interview with Bloomberg Television.
  • “The problem now is not so much on illiquidity. I think we have to focus more on insolvency problems that will occur across different sectors and segments of the economy,” he said. “The policy rate is already quite low.”
  • The bank has been studying unconventional monetary policy options such as yield-curve control, but Mr Veerathai said he doesn’t think it’s needed right now.
  • “We have to assess the situation on a regular basis,” he said. “If there is steepening of the yield curve to the point that it might affect the economic recovery, then yield-curve control might come in.”

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