Know what you're doing. Act honestly. Work hard. Exercise moderation. Apply insight. Build up inner resilience. But these principles can have different meanings in different hands. Who will be interpreting them for the Surayud government?

Pridiyathorn Devakula is a professional banker turned technocrat. At the Bank of Thailand, he consolidated the return to conservative macro-management following the 1997 crisis, resisted political pressure to manipulate the baht, and capped the government's enthusiasm for increasing consumer credit.

Kosit Panpiemras is a technocrat turned professional banker. In the long-running debate whether government should prioritise growth or stability, he has consistently been on the side of stability. His name will always be associated with the 1980s Poverty Plan, a major early attempt to push development funding down to the local level.

In the background as a key adviser is Ammar Siamwalla. Long before these people became spearheads of Sufficiency, they were committed free-marketeers, believing that monopolies and other rigidities make the economy less efficient and the society less fair. The Sufficiency principles of moderation, insight and prudence can be used to argue the case for removing restrictions on the operation of the market. This logic is already written into the Tenth Plan, which was based on Sufficiency principles and is due to debut next year. Kosit endorsed this line of thinking last week.

We can expect moves to undercut monopolies and politically created business advantages. The future of the Board of Investment could be at risk. The existing Monopoly Law has proved toothless and may be improved. Perhaps there will be moves against bid-rigging in the construction industry, unfair trade practices in the liquor market, and the detritus of concession structures in telecommunications. The new charter may make a better stab at outlawing conflict of interest.

At the level of macro-management, the most important part of the Sufficiency approach is the idea of self-immunity, or building inner resilience to deal with unexpected shocks. This government is not likely to move an inch from the post-crisis conservative macro-management of high reserves, inflation targeting, minimal management of the currency, and early-warning systems.

It may consolidate this with a more conservative fiscal stance, especially as Thailand could face dual deficits in the budget and current accounts. This will certainly mean cleaning up the Thaksin government's use of off-budget financing by making the amounts involved transparent and possibly reducing them too. It will also mean scaling back plans for mega-projects. As the falling oil price has lessened the threat to the current account, some budget deficit may be tolerable and perhaps appropriate given the economy's general lack of buoyancy.

This government is unlikely to interpret Sufficiency as meaning any change of attitude towards the foreign role in the economy. Economic nationalists will make a lot of noise in an attempt to influence the new government, but that was true of the early stages of the Thaksin government also, and ultimately came to nothing. In this area, the real world is more forceful than theory. Thailand's growth depends on exports, and exports depend on the multinationals. The business backers of the new government are no less involved in the globalised economy than those clustered around Thaksin.

But the sale of Shin Corp to Temasek has made it impossible to ignore the wholesale avoidance of the Foreign Business Act through the use of pyramided holding companies and nominees. The government has hypocritically outlawed certain foreign investment with one hand, and welcomed it with the other. The Sufficiency condition of integrity demands that this be cleaned up.

A trickier issue concerns household debt. The Thaksin government boosted growth and bought friends by multiplying new sources of credit. Advocates of Sufficiency have criticised these policies for making households less self-reliant, more dependent on loans and handouts, and more at risk from unexpected shocks. Moreover, on a macro scale, the Thaksin era completed Thailand's transition from a high-savings society. With financial liberalisation, followed by the 1997 bust, followed by Thaksin's credit splurge, the savings rate has fallen, especially the savings from households. This undermines the national economy's self-immunity by increasing dependence on foreign funds.

One solution is to convert Thaksin's village funds and other local credit schemes into micro-credit banks. This would force more discipline in credit management, encourage savings and possibly form a basis for financing local welfare schemes. But this would be a huge project, difficult to achieve in the time frame. The government may settle for imposing tighter accounting controls and better monitoring of credit usage on the village funds. But it might go farther. Lurking within the Sufficiency school is a distaste for government-provided social welfare. But politically this is a high-risk area. Thaksin's schemes were not only populist but popular. Abolishing them could increase nostalgia for the recent past.

The Sufficiency approach's emphasis on knowledge should dictate more spending, or at least better spending, on education. Thaksin talked a lot about education, but did very little other than inventing yet more credit schemes. The ambitious schemes of education reform, hatched in the late 1990s, have marked time during this interlude. The Tenth Plan puts a major emphasis on getting the upgrading of education moving ahead, not behind the changes in economy and society.

In the expected time span available to the Surayud government, the Sufficiency Economy approach is unlikely to imply any major shift of direction. The post-coup government of Anand Panyarachun in 1991-92 took the opportunity to push forward an agenda of economic liberalisation. This time it would probably be wrong to expect a shift of similar scale, either outward or inward. Rather, this government is likely to clean up some of the mess left behind by its predecessor, mount some attacks on long-standing distortions of the market and provide a welcome interlude from the tendency to turn every aspect of government into a business opportunity.

This is the conclusion of a two-part article. The first part was published yesterday.

chang noi