The Monetary Policy Committee (MPC) and central bank must improve their management of monetary policy, exchange rates and foreign reserves to ensure economic stability for the remainder of this year.
Deputy Prime Minister Kittiratt Na-Ranong made the call Thursday after a meeting of the government's economic team.
Mr Kittiratt said he questioned the two agencies' handling of the US$170 billion in foreign reserves, noting the Bank of Thailand (BoT) was holding 3 trillion baht worth of liquidity.
Absorbing too much liquidity has affected the exchange rate, he said, and the BoT's handling of the exchange rate in the second quarter has led to baht instability which has impacted exports.
Mr Kittiratt also questioned the MPC on its decision to maintain the policy interest rate at its meeting on Wednesday.
"The decision of the MPC only confirmed that it always takes action too late," Mr Kittiratt said.
He said as finance minister he could only express his concern because the power to act belonged to the MPC and its new chairman.
He said the government will not implement new measures but would accelerate 20 measures already approved by the cabinet earlier this month to lift the economy.
The government was not worried by the economic situation in the near future in light of low inflation and the falling value of the baht, he said.
However, the government's economic team will closely monitor oil prices for possible economic impacts in view of the baht's depreciation, the minister added.
The team also discussed growth in the second quarter, in which the economy grew 2.8% year-on-year against 5.4% year-on-year in the first quarter.
Mr Kittiratt said the meeting agreed that the National Economic and Social Development Board needed to provide more details about its figures.
He said year-on-year growth for the first half of this year was 4.1%, which was still higher than the same period last year when the economy grew by only 2.6% year-on-year.
He also insisted that the contraction of the economy for two consecutive quarters could not be considered a recession. GDP shrank 0.3% in the second quarter, after contracting by 1.7% in the first quarter.
Mr Kittiratt said the government will maintain its policy to stabilise the economy by trying to increase domestic consumption, the minimum wage and commodity prices.
He said he was still confident the economy will pick up during the second half of the year after the approved stimulus measures were implemented and through the acceleration of budget disbursement.
About the author
- Writer: Chatrudee Theparat
Position: Business Reporter