BANGKOK: Thai monetary policy must remain accommodative to underpin fiscal measures aimed at supporting businesses and households as the government tries to breathe life into the economy.
The country has been hit hard by the coronavirus pandemic with its vital tourism sector still struggling. It reopened this month to quarantine-free foreign visitors after more than a year of strict entry rules.
“As fiscal policy will focus on spending to help people and businesses, monetary policy must stay accommodative to allow the fiscal sector to work fully,” Finance Minister Arkhom Termpittayapaisith told a business seminar.
The government plans to approve US$2.3bil (RM9.7bil) more support for rice farmers next week.
Thailand needed to curb the external dependence of the economy and future growth must be inclusive to weather shocks, Arkhom said, adding it might no longer be able to count on 40 million foreign tourists a year as before the pandemic.
Bank of Thailand (BoT) governor Sethaput Suthiwartnarueput also told the business seminar that fiscal and monetary policy must work in step to aid the economy, which is expected to return to pre-pandemic levels in the first quarter of 2023.
“Every policy has its limitations and side-effects, so monetary and fiscal policies must be coordinated to reach each goal,” he said.
Fiscal policy will remain key for the recovery, which will be slow and uneven, Sethaput said, adding monetary policy would take time to have an effect and was not targeted.
The BoT, which sees economic growth of 0.7% this year and 3.9% next year, has left its benchmark interest rate at a record low of 0.50% since May 2020. — Reuters