Thailand: Parties' economic policies risky, say experts

From adnkronos.com (13 Nov 2007)

Bangkok, 13 Nov. (AKI) – Thailand's political parties have adopted policies that could contribute to an economic downturn in the leadup to the parliamentary elections in December.Several economists have said that the Thai economy is already slowing and could slip further with a slowdown in the US and higher oil prices. Exports contribute to 70 percent of Thailand’s gross domestic product and it is the largest oil importer in Asia when measured as a percentage of GDP.One of the country's leading investment banks, Phatra Securities, has warned that “more populist spending by the next government could seriously affect the country's fiscal position over the medium term."Thanong Khanthong, writing in the Thai newspaper ‘The Nation,’ stressed that Thailand needs "fiscal prudence" to assure economic stability.”“This is a dangerous way of thinking. Once we are hooked on populist spending, we can't stop. And the amount spent is going to become even greater in the future,” he added, referring to various parties’ plans. Experts said former Prime Minister Thaksin Shinawatra’s populist policies have been adopted by every major political party and could lead to fiscal problems for the country, whose economy is struggling, experts have recently noted. The Asia Times, a political and financial portal, warned that “the spending could be unsustainable, although Thailand currently presents some financial space for more government spending.” Thailand’s official public debt stands at 37 percent of gross domestic product, or GDP, but, the Asia Times said that it rises to nearly 44 percent when including off-balance sheet liabilities. Thaksin’s direct populist legacy is guaranteed by the People's Power Party (PPP), now considered the front runner in the December 23 vote. Nevertheless, research conducted by Phatra Securities shows that the Democrats stand a good chance of forming the next coalition government even if they win fewer seats than the PPP."Still neither is likely to form a strong coalition government," said Phatra. "Both would be reliant on the loyalty of medium-sized political parties."It said a defection by any one of the medium-sized coalition partners could bring the coalition government down.The PPP wants to maintain the populist policies introduced by Thaksin, which include a village fund, a debt moratorium for farmers, and virtual universal health care.The party also aims to go ahead with the ambitious infrastructure spending plans first proposed by Thaksin and valued at some 44 billion dollars over five years. Following in the footsteps of Thaksin is the Democrat Party, which used to criticise Thaksin’s populist economic policies If elected, the Democrats have promised mandatory free education for 12 years, free medical care, more financial benefits for retirees and debt restructuring for the poor. They have also promised “to restore the country's neo-liberal credentials” and launch an impressive infrastructure plan that includes at least three new mass transit train lines in Bangkok, a major renovation of the country's railway system and an expansion of irrigation systems in rural areas.Other parties have also pledged several spending initiatives.