World Bank may add to menu of funding options

The Nation (27 October 2007)

The government now has more choices of loan sources to finance mega-investment projects, Finance Minister Chalongphob Sussangkarn said yesterday.

"The World Bank is considering lending local currency to middle-income countries, which will benefit Thailand greatly," Chalongphob told reporters after he returned from Washington, where he attended the annual meeting of the World Bank and International Monetary Fund.

For years, Thailand has not borrowed from the World Bank since it only lends in dollars. If the World Bank offers Thailand baht loans, it would help the country significantly, he said.

Borrowing in dollars would create pressure on the exchange rate. The World Bank has adopted a new policy of supporting the middle-income group, he said. Borrowing from the World Bank has advantages because the bank also offers technical support. In the past Thailand largely borrowed from the Japan Bank for International Cooperation (JBIC). The government is also waiting for loans from the JBIC to finance mass-transit projects in Bangkok.

Chalongphob said the government had more choices now that the Export-Import Bank of China also offered loans to governments. "These offers are a menu we can choose from to meet our needs," he said.

In another development, Chalongphob said he would submit the draft of the Currency Act to the Cabinet on Tuesday. This will be the third time after Chalongphob postponed pushing it through the National Legislative Assembly.

"Ministers will better understand the draft bill after considering it several times," he said.
He promised to cut the controversial clause that would indirectly allow the central bank to use its accumulated profit or special reserves to pay back the debts of the Financial Institutions Development Fund.