Finance Minister: Rating downgrade raises borrowing costs minimally
The downgrade of Thailand’s local currency rating by
Standard & Poor’s earlier this week due to violence and political turmoil
will not increase borrowing costs for the Thai government greatly as the
government plans to focus on domestic borrowing, Finance Minister Korn
Chatikavanij said Thursday.
Liquidity in Thailand remains high and has risen to Bt1.5 trillion while
Thai businesses have no plans to borrow internationally due to the sluggish
domestic economy, Korn said during an appearance on a TV Channel 9 economic
The government must rely mainly on domestic borrowing to finance its second
round of economic stimulus program requiring a total investment of Bt1.56
trillion, he said.
The downgrade on the currency rating came after Monday’s bloody street
clashes in Bangkok between anti-government protesters and government forces
which left two persons dead and 123 wounded or injured. The two fatalities
occurred when local market vendors clashed with protesters in the absence of
government security forces.
Overseas loans, however, are still needed because Thailand still needs
foreign currencies for use in importing raw materials, Korn said, but
borrowing from abroad will be minimal.
Korn said it is not yet known whether the Bank of Thailand (BoT) Monetary
Policy Committee will lower its policy interest rate further to stimulate
the domestic economy.
The central bank on April 8 cut its key interest rate by 25 basis points to
1.25 percent in an attempt to spur the domestic economy after finding that
the current global economic meltdown is much more severe than earlier