As the risk of political turmoil climbs after the 60th anniversary celebrations of His Majesty the King's reign, the caretaker Thaksin government has come up with a mixed bag of measures to jump-start the economy and preserve its political popularity, particularly among the poor.

But few expect the initiatives to make much difference in terms of boosting the economy, given the higher oil prices, rising cost of living and high interest-rate environment.

Prime Minister Thaksin Shinawatra has given the state planning agency the responsibility for tracking progress in the broad economic framework's objectives: preventing a further slide in the economy and helping financially-strapped folks get by during these tough times.

"We have been assigned to monitor the progress of the implementation of the economic framework and report back to the Cabinet. This covers the incomes and spending burdens of low-income earners, the income of the country as a whole, the acceleration of fiscal spending and also fiscal and monetary discipline," Dr Ampon Kittiampon, secretary-general of the National Economic and Social Development Board, said yesterday.

Next week the Cabinet will focus its deliberations on steps to help the low-income earners, categorised into farmers, daily-wage workers, salaried staff and small-business owners.

The Bank for Agriculture and Agricultural Cooperatives will be instructed to cut its loan interest rate by 1 percentage point for farmers with debts under Bt100,000. Crop prices and the flow of agricultural produce will be tracked closely to shore up farm income, though crop prices are generally good this year.

Most controversial is a Bt10 hike in the minimum daily wage. Thaksin, who chaired a special Cabinet meeting last week, has directed the labour and finance ministries to conduct research on the impact of a minimum wage increase on inflation.

"During this time, the high oil prices, rising cost of living and higher interest rate on mortgage loans are the big burden of Thais. The prime minister has instructed that a focus-group study be made in order to get a clear picture of each segment of the population," Ampon said.

The labour and finance ministries will report back in two weeks on whether a wage hike is justified.

Dr Supavud Saicheua of Phatra Securities Co warned that the government must handle the minimum-wage issue carefully to prevent anticipation of prices going up.

"If there is a perception that labour costs will rise, prices of other goods will rise, creating a spiral effect. We have learned from past lessons that inflationary expectations should not be allowed to develop," he said.

Other ways to help low-income earners include having the Bangkok Mass Transit Authority (BMTA), which runs public buses in Bangkok, offer discounts on its tickets. The BMTA, which consumes Bt30 million of diesel a day, will undertake a mass conversion of its fleet of 2,000-3,000 buses to natural gas. This overhaul, which will cost about Bt5 billion, will slash its oil bill by two-thirds.

The SME Bank has also been instructed by the government to help look after its customers by ensuring that they have enough liquidity to get through this difficult period.

At the national income level, the export and tourism sectors will be vital players in seeing that the country can maintain current account stability.

The public sector also has a major role in pushing the economy forward by accelerating spending, as only half of this year's budget has been disbursed.

Ampon was optimistic that the pace could be picked up in the four months left in the fiscal year ending September.

"State enterprises still have Bt200 billion in fresh investment in the pipeline until the end of the fiscal year, with another Bt200 billion available to government agencies and Bt80 billion in carry-overs from the last fiscal year. Overall, we have almost Bt500 billion that has yet to be disbursed. Investment for the country must proceed, although there might be political problems," he said.

For fiscal and monetary policy, the Finance Ministry and the Bank of Thailand have been urged to go out and rebuild confidence in the economy, guard against foreign-exchange volatility and keep interest and inflation rates at an appropriate level.

An investment strategist for a major insurance company said the government should focus on public spending in order to boost the economy because of signs of slackening in growth, both in exports and consumption.

"We understand that the caretaker government does not have a mandate and they can't do too much. But the government should focus on public sector spending to help stimulate the economy," he said.

This year the economy will expand by only 4-4.5 per cent, and the task of the new government is to ensure that the growth rate is back on track at 5-5.5 per cent, he added.

Thanong Khanthong

 The Nation