- Fiscal balance continued to record deficit for two fiscal quarters in row due to the shortfall in revenue collection. In the second quarter of FY 2009 (January — March 2009), the total government revenue collection was at 284,362 million baht, declined from the same quarter of FY 2008 by 6.5 percent and lower than its target by 44,440 million baht (or 13.5 percent). The shortfall of revenue collection was attributable to the decline in revenue from consumption-base tax, particularly value added taxes that
On expenditure side, the total disbursement was at 567,441 million baht, increased by 41.1 percent from that of in the same period last year. Budget disbursement can be categorized into annual budget disbursement of 523,041 million baht and carry-over budget disbursement of 44,399 million baht. Therefore, budget balance recorded a deficit of 283,079 million baht, compared with 98,029 millions baht in the same period of last fiscal year. With surplus of non-budgetary balance of 97,466 million baht (from principal repayment account and from an issuance of government bonds and treasury bills of 175,530 million baht), cash balance (after borrowing) registered a deficit of 10,083 million baht.
In the first half of FY 2009 (October 2008 - March 2009) total disbursement was at 885,713 million baht which is 54.4 percent of total expenditure budget of 1,957,700 million baht (including supplementary budget of 116,700 million baht). The disbursement of supplementary budget was at around 36,729 million baht under major programs namely: “2,000 baht cash handout” (amount 16,231 million baht), “15 year free education” (14,005 million baht) and “6 months 5 measures” package (6,392 million baht). Capital budget disbursement was at 128,178 million baht equivalent to 31.2 percent of total capital budget, lower than 39.5 percent disbursement rate in the first half of FY 2008.
Public Debt at the end of February 2008 stood at 3.6 trillion baht, which is equivalent to 39.9 percent of GDP, slightly increased from outstanding debts at the end of December 2008 of 38.1 percent of GDP. In February, direct government debt was at 63.6 percent of total debt outstanding. Public outstanding debt increased by 127,050.2 million baht at the end of February, which is equivalent to 3.7 percent increase from outstanding debt in December. The increase in public debt was mostly due to the increase of direct government domestic debt.
- Financial conditions: Policy rate lowered continuously and money market interest rate declined accordingly, Real interest rate decreased throughout the quarter, before increase slightly in April. Deposit and loans growth rate slowed down significantly, while excess liquidity rose constantly. Thai baht depreciated. Stock market index and trading volume continue to fall with recovery sign at the end of the quarter. Bond market expanded slightly.
- Policy Rate: The Monetary Policy Committee (MPC) lowered the policy rate twice, total of 1.25 percent, from 2.75 percent at the end of the fourth quarter to 1.50 percent at the end of the first quarter. The decision was made on the basis of: 1) current economic contraction, 2) bearish economic outlook from further contraction in export, 3) weakening domestic consumption and investment, and 4) negative inflationary rate. Policy rates in oversea market, especially for major economic countries, were kept unchanged from multiple reductions taken during the fourth quarter of last year. US and Japan policy rate remained almost 0 percent throughout the quarter. However, there were some countries that decided to lower its policy rate to stimulate economic activities. ECB cut its policy rate by 1 percent to 1.5
In April, most of the countries kept their policy rates unchanged except Thailand and European Union. Both countries decided to lower their policy rate further by 0.25 percent, ending their rate in the same level at 1.25 percent per annum.
- Commercial banks’ deposit and lending rate declined in tandem with a reduction of policy rate, while the real interest rate slightly decreased. At the end of the first quarter, an average 3-month and 12-month time deposit rates of the five commercial banks declined from 1.62 and 1.88 per annum to 0.75 and 0.88 per annum respectively, while MLR lending rate decreased from 6.88 to 6.25 per annum. During the first quarter deposit had declined due to: 1) policy rates cut proven to have higher impact toward deposit rate than MLR lending rate which resulted in rapid decline of deposit rate, 2) weakening income, and 3) higher return can be generated from alternative investment like bond market and bill of exchange (B/E). Real 12-month deposit rate decreased from 1.48 to 1.08 per annum, in correlation with policy rate cut. Meanwhile, real MLR lending rate remains stable at 6.45 compared to 6.48 per annum at the end of last quarter. All owe to a small reduction in MLR lending rate, around 0.6, and negative inflation rate, recorded at negative 0.2 percent. In April, real deposit and MLR lending rate were increased from
- Money multiplier and Velocity of money evidentially declined. This retraction reflect limitation on effectively carrying out monetary policy, especially in the present time where economic still in recession, confidence level remains low and financial institutions have high caution about credits expanding.
- Commercial Banks’ deposits growth rate slowed down. At the end of the first quarter of 2009, commercial banks’ deposits increased by 3.9 percent, compared with 7.8 percent of expansion in the forth quarter of 2008. Commercial banks’ deposits expanded at slower rate in all account type and in all deposit size; especially in fix account which increased by 4.7 percent compared to 12.7 percent expansion at the end of the forth quarter 2008. Depositors’ saving preference was gear toward higher return instrument like bill of exchange (B/E). Thus, demand for bill of exchange had significantly increased
- Business credits expanded at a slower pace, while personal credits slightly increased. Loans extended by Depository Corporation expanded slowed down from 10.2 percent in the forth quarter of 2008 to 8.0 percent at the end of the first quarter of 2009. Incorporate with reduction in lending rate, it reflected 1) stricter loan standard to better manage default risks that usually rise
during the period of economic slowdown, and 2) lower demand for credits under weakening consumption and
investment. Loan to all business sectors had slowed down to 5.37 percent, compare to 11.2 percent expansion in the forth quarter of 2008. While, household credits increased slightly from expansion in housing loan
by commercial banks’ and Specialized Financial Institutions (SFI). Credit card spending and cash withdrawal declined owing to concern over income prospects and deteriorating economic condition. Credit card outstanding balance slowed down to 3.7 percent, compare to 5.5 percent expansion in the previous quarter.