"Assistance through populist policies is unsustainable. Giving help to the poor is still essential, because half the population has an income of around Bt115 per day, but such assistance should not encourage them to think the government is giving them money when it's really only extending them loans," he said.

He said populist policies caused problems, because politicians forget they should follow principles of good governance.

"Those [politicians] helping the poor should look at the overall picture, and policies should not be extreme. Giving too much would place the country at high risk. The distorted markets that result pose a danger to the economy. Policies should comply with self-sufficiency. Political leaders who don't want to promote populist policies should announce their intentions as soon as possible, so as to break the cycle of apparent gifts," said Chalongbhop.

He also urged Asian countries to coordinate their investments in international reserves, in order to alleviate the volatility of foreign-exchange markets, because East Asia's international reserves account for 60 per cent of those in the world.

He said the ability of the US Federal Reserve to control the financial market through the Fed fund rate seemed to be deteriorating, as seen by the fact that the yield curve for long-term bonds hardly moved in response to the Fed's actions.

Chiang Mai University lecturer Anand Karnjanapan warned that Thailand had no structure to prepare for the impact of market liberalisation, including free-trade agreements.

Fiscal Policy Office director-general Naris Chaiyasoot said yesterday his agency estimated economic growth of 4.5 per cent per year over the next three years, which would be in line with the country's 10th National Economic and Social Development Board plan. However, he said after meetings with relevant parties there was still no conclusion on whether the government's budget for the fiscal 2007 would be balanced or in deficit.

"We can't say how our budget planning over the next three years will look," he said. He added that economic growth from 2008-09 should not be lower than 4.5 per cent.

Commenting on the upcoming road show in Singapore hosted by the Finance Ministry and the Stock Exchange of Thailand, he said more than 100 representatives from 40 the world's leading institutional investors had expressed their intention to participate in the event.

The road show will be held next Thursday and Friday. Ten listed companies, including PTT Plc, Bangkok Bank and Krung Thai Bank, will participate on a one-on-one basis.

"Krung Thai Bank, Bangkok Bank and Asian Property receive the most interest from foreign investors, because their share prices are attractive. Political issues and monetary and fiscal policies are another issue that investors are curious about, and we've already prepared answers," he said.

Given the strong demand from investors to meet with listed companies' executives, group meetings might be possible, and some companies plan to travel in advance to meet investors.

Meanwhile, Claudio Piron, head of Asian foreign-exchange research for JP Morgan Chase, was quoted by Reuters as saying he recommended selling the baht through a one-month US-dollar/baht put option, with a strike price of Bt38.50 per dollar.

A vulnerable current-account balance and heavy speculative positions in the Thai baht would put the currency at risk of a sharp decline if foreign investors unloaded Thai shares.

Wichit Chaitrong

The Nation