Fitch Ratings Cited as an Indication of Thailand’s Economic and Political Stability

(18/03/2013)

Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong stated that the upgrading of Thailand’s credit rating by Fitch Ratings reflected Thailand’s economic and political stability. Speaking in the weekly program “Yingluck Government Meets the People” on 16 March 2013, Mr. Kittiratt referred to Fitch Ratings’ statement on 8 March 2013, which raised Thailand's Long-Term Foreign Currency Issuer Default Rating from BBB to BBB+. The credit rating was upgraded on the grounds that Thailand’s political situation has stabilized and economic fundamentals and external finances remain strong. Moreover, the country’s inflation and public debt are at low levels. Mr. Kittiratt said that another reason was that Thailand would invest in infrastructure mega-projects on a long-term basis. According to the statement, Thailand's economy has been resilient to repeated shocks, including heavy flooding in the fourth quarter of 2011, underpinned by a flexible monetary and exchange-rate policy framework. He said that the rating agency had collected information from public, private, and civic organizations in Thailand before coming up with the new rating. Mr. Kittiratt thanked all agencies involved for their cooperation in giving actual information to experts from Fitch Ratings, which led to the better credit ranking. He hoped that the rating would be upgraded further in the near future. This would increase confidence among Thai and foreign investors. The economic growth of 5 to 7 percent was cited as a suitable rate for the country to receive higher rating. Thailand expects that GDP will expand at around 4.5 – 5.5 percent in 2013. According to Mr. Kittiratt, long-term planning for Thailand’s development could strengthen Thailand's credit ranking as a whole. For example, the Government has planned two trillion baht’s worth investment in infrastructure mega-projects over the next seven years. Borrowing for the projects would be carried out gradually in line with economic growth. In implementing these projects, he said, the Government would ensure that public debt would not exceed 50 percent of GDP. Based on financial disciplinary principles, Thailand has set its public debt ceiling at not over 60 percent of GDP. Meanwhile, the Secretary-General of the Office of the National Economic and Social Development Board, Mr. Arkhom Termpittayapaisith, said that the upgrading of Thailand’s credit rating would attract more investment in the country. Private sector investment expanded throughout 2012. The planned two-trillion-baht investment projects would facilitate business operation and create confidence among investors. He believed that more foreign investors would invest in Thailand, as the mega-projects would promote connectivity in the region, lower logistics costs, and enhance Thailand’s competitiveness.