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This is very good discipline, something really needed at this critical juncture. In executing the country's economic policies, it is not unusual for individuals or authorities to differ in opinion. However, if various authorities keep feeding to the press different points of view, the public might get confused and feel that the authorities overseeing the country's economic policies do not see eye to eye.

At this moment in time, Thailand is already facing too many conflicts. Consultation on an issue before talking to the press should, therefore, be logical and helpful in avoiding any possible conflict or confusion by the public, and should contribute to greater public confidence in the government's announced policies and corrective measures.

What more? The prime minister said "The problem now is not the availability of funds and the level of interest rates but rather the risk that financial institutions face in extending credit to customers." On this note, the prime minister, the chief of the Cabinet, proved that he did understand the entire situation correctly.

We constantly hear the complaint that financial institutions do not have enough liquidity to extend credit. In fact, the current 95-per-cent loan-to-deposit ratio is in itself proof that there still are deposits remaining to be lent out.

However, under the current circumstances where exports have dropped and domestic consumption has started to pull back, some financial institutions have become stricter in extending credit out of fear of creating NPLs. That is why the prime minister said what he did.

A correct understanding of the nature of the problem will ensure that appropriate policy measures, which correctly address the ongoing economic problems, will be used. We should no longer hear proposals to have the central bank inject more liquidity into the financial system, but should hear more about measures to stimulate credit extension and reduce related risks.

Having talked about the prime minister, I also would like to turn to the finance minister. Just a week ago, he revealed the proper direction of a budget deficit to stimulate the economy. He indicated that the government would not implement a reduction of the corporate income tax from 30 per cent to 25 per cent, as intended by the Democrat Party-led Cabinet.

They will, instead, maintain the tax rate while ramping up government expenditures. This idea is praiseworthy.

A corporate tax cut is meant to attract foreign investors who now enjoy lower rates in other countries. However, a falling tax burden in a progressive tax structure only keeps money in private pockets.

Under the current situation with the world economy in a slump, foreign investors are reluctant to invest anything for at least two years. They have to see to their businesses, which are facing more serious problems in their own countries.

A lower tax rate will inflate the deficit but it is a weak device to rev up the economy. The reduced tax will only help businesses make more profits but they will not invest anything while purchasing power slows down if not shifts into reverse.

Increasing government spending will effectively boost the economy. The additional budget deficit for stimulating the economy, as mentioned by the foreign minister, focuses mainly on investment that would create jobs and not on programmes that would amount to handing people extra cash for spending. Cash dole-out schemes would stimulate the economy through higher consumption.

But investment projects that create jobs could accommodate the workers who might be laid off from industries suffering from the economic slowdown. This would help relieve social tension.

Besides, such projects normally involve construction work, which would help stoke demand for construction materials. Income from new jobs would also fuel consumption, which would help to stimulate the broad economy as well.

One economic stimulus measure that is still unclear is the plan to double the SML budget for local communities. The programme was initiated by the previous government to stimulate the rural economy. But it is still unclear whether this additional SML budget would be used to finance projects needed by the local communities such as water reservoirs, roads, schools or hospitals, or whether it would be simply dished out as cash for additional consumption. I simply hope that it would be mainly for investment projects that also create jobs.

Having praised the finance minister for his good deed, I would like to raise my concerns on his slight misunderstanding of the state of liquidity. At a seminar on "Restoring Thailand's Economic Confidence", hosted by the Sasin Graduate Institute of Business Administration, he told journalists that he would urge the central bank to print more money as a means of increasing liquidity in the system.

On that note, it shows that the finance minister, at that time, believed that additional funds had to be injected into the financial system to allow for credit extension to local businesses, which was contrary to the facts.

However, that evening, after discussion with the central bank governor, I trust that the finance minister would clearly understand this issue as much as the prime minister, as they were both at the same meeting. We can then rest assured that all parties correctly understand the issue and that policy measures would correctly address the problem.

Until next Monday.