Bt70-bn loan 'to stimulate economy'

Prime Minister Abhisit Vejjajiva yesterday said his government would prepare the terms for borrowing some Bt70 billion from international institutions this week as part of the strategy to combat economic distress.

"We will borrow money to stimulate the economy. If we do nothing, more people will be jobless, which will impact the economy more seriously," Abhisit said at the launch of a career fair near Bangkok.

During his weekly TV show, Abhisit, who survived a no-confidence vote in Parliament on Saturday, said more investment is needed to boost the economy and competitiveness.

The Bt70 billion in foreign funding would be spent on basic infrastructure, including water resources and roads.

In January the government announced a Bt116.7-billion (US$3.35 billion) stimulus package aimed at boosting the sagging economy, creamed by last year's airport blockade and the world financial crisis.

The plan combines cash handouts for lower-income earners, tax cuts, expanded free education and subsidies for transport and utilities.

The first economic stimulus package - including the Bt2,000-grants for employees earning less than Bt15,000 monthly, monthly pensions of Bt500 to those over 60, and

a free 15-year education for children - will be gradually launched starting late this month.

Now Abhisit is aiming at medium- and longer-term measures to stimulate investment and employment as the world economy heads deeper into the doldrums.

Finance Minister Korn Chatikavanij said during the no-confidence debate on Friday that without any stimulus measures or government intervention, the economy could easily regress 8-9 per cent this year.

Abhisit yesterday said global trade now shows signs of shrinking 20-30 per cent and this calls for money to be urgently injected into the economic system.

The government needs about Bt1.4 trillion for new projects over three years and planning for it is taking place now, he said.

The budget will be spent

on high-speed railways,

road improvements, water resources for farmers, edu-cation and public health, he said.

Unemployment could nearly double this year because of the global and local financial turmoil, he said.

"It is estimated at one million, at least," he told reporters at the career fair.

Thailand's export-driven economy has been crushed by the global financial meltdown, with gross domestic product (GDP) expected to be flat or contract by up to one per cent this year. A GDP drop of at least four per cent this quarter is also probable.

The Bank of Thailand has forecast that 1.07 million people - or 2.8 per cent of the total workforce - would lose their jobs if the economy just treaded water this year.

The unemployment rate was 1.4 per cent last year, according to the National Statistical Office website.

The stimulus investment plan will be presented to economic ministers for consideration this Wednesday, Abhisit said.

He has said that he plans to meet his economic team to evaluate the effects of the global financial crisis on the domestic economic situation while the government would initiate a second round of economic stimulus package.