Huge stimulus package will work

Speaking at a luncheon hosted by Tjaco van den Hout, the Netherlands' ambassador to Thailand, Korn said there would also be a special task force to ensure that the massive public-investment schemes were executed on schedule.

Implementation of these schemes - from irrigation, roads and railways to education and healthcare projects - would be a big challenge, he said, adding that there had been little progress in the execution of the previous 10 mass-transit lines, for example.

Korn said it would take about two-and-a-half years to implement the Bt1.5-trillion package, the second of its kind following an earlier Bt117-billion package. The latter accounted for 1.2 per cent of gross domestic product.

The government will borrow about Bt800 billion to help finance the second, longer-term stimulus package, which is expected to boost GDP by 2 percentage points annually.

The package, which accounts for 17 per cent of GDP, will create 1.5 million to 2 million jobs during the period.

During this period of low business and consumer confidence, the government has the leading role in boosting confidence in the economy, the minister said.

He said the fiscal position would be manageable in the wake of executing the massive second package, since public debt will peak at 60 per cent of GDP, against 40 per cent now.

Turning to political risk, Korn said he was often asked by foreign investors whether the Abhisit Vejjajiva government would still be around when implementing the second stimulus package.

"My answer is that we will be around, but a change of government should not affect the programme," he said.

Korn added, however, that the prime minister was expected to call a general election in a year's time.

In his opinion, such a time line should not be seen as a risk, but rather as political goodwill.