Guideline
The 8th Economic and Social Development Plan (1997-2001) was
formulated furing 1995-1996 when the economic situation was different from
what Thailand is currently facing; thus the plan has to be adapted to the
changing economy and current needs of the country. For this reason, on
September 9th, 1997, the Cabinet approved a proposal, submitted by the
National Economic and Social Development Board stating that the 8th Plan
will be revised according to these guidelines:
- Maintain the 8th Plan's objective to develop human resource to
full potential in order to achieve sustainable development.
- Revise macroeconomic target, taking into account the current
economic situation and the agreement between the Thai government and the
IMF.
- Revise the investment plan.
- Set up criteria to scale down and rephase public investment
projects.
- Revise the economic structural adjustment part of the 8th Plan
to accommodate the IMF agreement and the structural adjustment loans from
the World Bank and the Asian Development Bank.
Framework of the Revised 8th Plan
According to these guidelines, the main objective to develop human
potential remain unchanged. The revision, therefore, will be mainly on
the economic front, taking into account the agreement between the Thai
government and tha IMF which emphasize economic stability and security.
Macroeconomic Projection under the IMF Agreement
The IMF has set up Thai macroeconomic regulations as follows:
- Maintain the price stability. The inflation must be kept at an
average rate of 7.5 percent in the first 2 years of the Plan, 4.4 percent
in the following 3 years in order that the rate will be at 5.6 percent on
average for the five-year period.
- Maintain the external stability. The ratio of current account
deficit to GDP must be reduced to 5 and 3 percent in 1997 and 1998
respectively and maintain 3.4 percent on average in the last 3 years of
the Plan.
In order to achieve these economic stabilization conditions, the
revised macroeconomic target over the period of the 8th Plan is 4.9
percent on average, of which the growth rate will be 2.5-3.5 percent
during the first 2 years, and 5.5-6.5 percent in the remaining years.
The Revision of Overall Investment Plan
In light of the revised macroeconomic target which is lower than
the growth rate during the 7th Plan and the target previously set in the
8th Plan, the overall expenditure, both public and private, must be
controlled to go in line with the country's economic and financial
conditions. The overall investment, therefore, must be kept around 36.9
percent of GDP during the 8th Plan, compared to 40.5 percent of GDP during
the 7th Plan. As compared to the previous 8th Plan, the new overall
investment is estimated to be around 11,391,573 million baht, a 3,930,427
million baht reduction. Public investment, by both the government and
state enterprises, will be 1,121,262 million baht cut off to record the
total amount of 2,985,038 million baht.
Public Investment Criteria
The criteria for screening public investment projects will
strictly consider the projects with low import content and stimulate
employment, or has adequate foreign currency generation capacity to cover
foreign currency cost. As applied for projects operated by private
contractors, foreign equity financing is preferable to foreign loans.
Government agencies and state enterprises are assigned to review their
investment plans and prioritize programs and projects. The screening and
postponing investment projects of any agency; however, must have minimal
adverse effect on the human resource development target.
The Structural Adjustment Plan
Despite the revision of overall investment, economic restructuring
has to be urgently performed.
The structural adjustment plan will focus on, firstly, increasing
financial and overall economic stability in order to regain confidence
and, secondly, adjusting production structure to boost export and increase
international competitiveness. Owing to present circumstances and limited
resources, important measures are determined as follows:
- Promote technological development in the sector with foreign
earning potential and encourage joint investment between local and foreign
investors.
- Promote services and tourism sector which obtain high foreign
earning potential, meanwhile, minimize foreign currency expenses.
- Improve educational system and vocational skill training system.
- Improve the efficiency of public administration system and good
governance to cope with economic difficulties under public-private
cooperation.
- Increase private participation in infrastructure development in
order to reduce public investment burden and improve the efficiency of
state enterprises.
- Take care of the poor who are suffered from the economic crisis
and provide them appropriate opportunities to survive during
transformation period.
Previous Revised target under IMF agreement Average
avg. target 1997 1998 1999 2000 2001
Growth rate (%) 8 2.5 3.5 5.5 6.5 6.5 4.9
Inflation (%) 4.5 7.0 8.0 4.6 4.3 4.3 5.6
Current account deficit 3.4* 5.0 3.0 3.2 3.4 3.6 3.6
to GDP (%)
Note : * last year of the Plan
--Development News Bulletin, National Economic and Social Development
Board, Volume 12, No.10: October 1997--
The 8th Economic and Social Development Plan (1997-2001) was
formulated furing 1995-1996 when the economic situation was different from
what Thailand is currently facing; thus the plan has to be adapted to the
changing economy and current needs of the country. For this reason, on
September 9th, 1997, the Cabinet approved a proposal, submitted by the
National Economic and Social Development Board stating that the 8th Plan
will be revised according to these guidelines:
- Maintain the 8th Plan's objective to develop human resource to
full potential in order to achieve sustainable development.
- Revise macroeconomic target, taking into account the current
economic situation and the agreement between the Thai government and the
IMF.
- Revise the investment plan.
- Set up criteria to scale down and rephase public investment
projects.
- Revise the economic structural adjustment part of the 8th Plan
to accommodate the IMF agreement and the structural adjustment loans from
the World Bank and the Asian Development Bank.
Framework of the Revised 8th Plan
According to these guidelines, the main objective to develop human
potential remain unchanged. The revision, therefore, will be mainly on
the economic front, taking into account the agreement between the Thai
government and tha IMF which emphasize economic stability and security.
Macroeconomic Projection under the IMF Agreement
The IMF has set up Thai macroeconomic regulations as follows:
- Maintain the price stability. The inflation must be kept at an
average rate of 7.5 percent in the first 2 years of the Plan, 4.4 percent
in the following 3 years in order that the rate will be at 5.6 percent on
average for the five-year period.
- Maintain the external stability. The ratio of current account
deficit to GDP must be reduced to 5 and 3 percent in 1997 and 1998
respectively and maintain 3.4 percent on average in the last 3 years of
the Plan.
In order to achieve these economic stabilization conditions, the
revised macroeconomic target over the period of the 8th Plan is 4.9
percent on average, of which the growth rate will be 2.5-3.5 percent
during the first 2 years, and 5.5-6.5 percent in the remaining years.
The Revision of Overall Investment Plan
In light of the revised macroeconomic target which is lower than
the growth rate during the 7th Plan and the target previously set in the
8th Plan, the overall expenditure, both public and private, must be
controlled to go in line with the country's economic and financial
conditions. The overall investment, therefore, must be kept around 36.9
percent of GDP during the 8th Plan, compared to 40.5 percent of GDP during
the 7th Plan. As compared to the previous 8th Plan, the new overall
investment is estimated to be around 11,391,573 million baht, a 3,930,427
million baht reduction. Public investment, by both the government and
state enterprises, will be 1,121,262 million baht cut off to record the
total amount of 2,985,038 million baht.
Public Investment Criteria
The criteria for screening public investment projects will
strictly consider the projects with low import content and stimulate
employment, or has adequate foreign currency generation capacity to cover
foreign currency cost. As applied for projects operated by private
contractors, foreign equity financing is preferable to foreign loans.
Government agencies and state enterprises are assigned to review their
investment plans and prioritize programs and projects. The screening and
postponing investment projects of any agency; however, must have minimal
adverse effect on the human resource development target.
The Structural Adjustment Plan
Despite the revision of overall investment, economic restructuring
has to be urgently performed.
The structural adjustment plan will focus on, firstly, increasing
financial and overall economic stability in order to regain confidence
and, secondly, adjusting production structure to boost export and increase
international competitiveness. Owing to present circumstances and limited
resources, important measures are determined as follows:
- Promote technological development in the sector with foreign
earning potential and encourage joint investment between local and foreign
investors.
- Promote services and tourism sector which obtain high foreign
earning potential, meanwhile, minimize foreign currency expenses.
- Improve educational system and vocational skill training system.
- Improve the efficiency of public administration system and good
governance to cope with economic difficulties under public-private
cooperation.
- Increase private participation in infrastructure development in
order to reduce public investment burden and improve the efficiency of
state enterprises.
- Take care of the poor who are suffered from the economic crisis
and provide them appropriate opportunities to survive during
transformation period.
Previous Revised target under IMF agreement Average
avg. target 1997 1998 1999 2000 2001
Growth rate (%) 8 2.5 3.5 5.5 6.5 6.5 4.9
Inflation (%) 4.5 7.0 8.0 4.6 4.3 4.3 5.6
Current account deficit 3.4* 5.0 3.0 3.2 3.4 3.6 3.6
to GDP (%)
Note : * last year of the Plan
--Development News Bulletin, National Economic and Social Development
Board, Volume 12, No.10: October 1997--