Interest rate cuts this year should be well-timed to support continuous economic growth, says Finance Minister Pichai Chunhavajira.
Speaking after presenting awards for excellence in fiscal management, Mr Pichai said every country is concerned about the consequences of interest rate cuts, particularly inflation and an overheating economy.
However, he said Thai inflation is currently at a low level and has remained low for a long time, adding that lowering interest rates would be beneficial for the overall economy.
"Policy rate reductions this year will be seen as a timely move, as it aligns with Thailand's improving economic trajectory," he said.
He explained that while Thailand's GDP growth rate last year was only 2.5%, during the first two quarters of 2024 the government was unable to take significant action due to delayed approval of its budget.
But in the third and fourth quarters, economic growth reached 3% and 3.2%, respectively, he said.
"Economic growth has been gaining momentum, but if we only focus on the first half of the year, which faced many constraints, we might misinterpret the situation," Mr Pichai said.
According to Mr Pichai, policy interest rate cuts will not only lower financial costs for individuals and businesses, but also help to weaken the baht, making financial institutions more flexible in providing loans.
He said that he had recently returned from Japan, where the yen had remained strong for a long time but has now weakened. While a weaker currency can lead to higher import costs, Japan, as an export-driven economy, has seen an export recovery. Therefore, Japan prioritises exchange rate management, he said.
Similarly, Mr Pichai added that Thailand, as an export-oriented country, must compare its currency with those of its competitors. He said the baht has appreciated over the years.
"Countries with weaker currencies likely implement various measures to sustain economic growth," Mr Pichai said.
He emphasised that the currency's value is a result of multiple economic policies, including interest rates and loan provisions, which will help enhance a country's competitiveness. He urged policymakers to adopt a balanced perspective rather than focusing on a single aspect.
"Effective inflation control requires keeping inflation at an appropriate level. If it is not at the right level, can it truly be considered well-managed? We must also understand that inflation has wide-ranging impacts -- not only on consumers but also on producers," he said.
Regarding the debt relief programme for individuals under the "You Fight, We Help" initiative, Mr Pichai noted that many small borrowers have yet to join it.
He said that some may be unaware of its existence, while others might avoid answering calls from financial institutions, fearing scams. Therefore, adjustments may be required to enhance accessibility, he suggested.
Debtors are required to sign restructuring agreements in person, but future adjustments may enable some cases to proceed without the need for in-person signing with financial institutions.
As for the third phase of the digital wallet programme, which still has a remaining budget of 157 billion baht, Mr Pichai said some details of the project may be adjusted, though no specifics can be disclosed at present.
Meanwhile, Patricia Mongkhonvanit, director-general of the Comptroller-General's Department, said that from October 2024 to the end of February 2025, investment budget disbursements were expected to reach around 29% of the total investment budget. The disbursement rate is expected to accelerate in the latter half of the fiscal year, she said.
In the 2024 fiscal year, total investment budget disbursements reached 65%, below the target of 75%, due to the delayed approval of the 2024 Expenditure Budget Act.
