Review for Thai credit rating<\/p>\n
BANGKOK (AFP): New York-based Moody's Investors Service is to
\nreview Thailand's sovereign credit rating for a possible
\ndowngrade amid concerns about its economy, according to a
\nstatement received here yesterday.<\/p>\n
The agency, which assesses the risk of extending credit to
\nmajor borrowers, said the review was prompted \"by concerns
\nregarding the soundness of Thailand's financial sector.\"<\/p>\n
Thailand's sovereign credit rating -- the rating given by
\nMoody's to long term foreign currency debt issued by the
\ngovernment -- is currently at \"A2,\" signifying an upper-medium-
\ngrade investment.<\/p>\n
Moody's said \"a large portion of the recent accumulation of
\nshort-term foreign currency debt has been concentrated\" in the
\nThai financial sector.<\/p>\n
The report noted that financial institutions had built up an
\nexposure to the property sector and were now experiencing an
\nincrease in non-performing loans.<\/p>\n
The Thai property sector has been hit by a combination of high
\ninterest rates and oversupply, cutting into the bottom line for
\ndevelopers and resulting in large scale non-performing debts in
\nthe financial sector.<\/p>\n
\"In addition, other problems in their loan portfolios may yet
\nemerge since Thailand's export-oriented industrial sector is
\nexperiencing financial strains in the wake of last year's dismal
\ntrade performance,\" it said.<\/p>\n
Moody's said the government's recently announced budget cuts
\n\"should help to contain the unsustainable current-account
\ndeficit.\"<\/p>\n
The Thai finance minister recently presented a budget to the
\ncabinet for the year to September that slashed projected
\ngovernment spending by 54 billion baht (US$2.1 billion) and state
\nenterprise investment by 40 billion baht.<\/p>\n
However, Moody's added that maintaining the level of public-
\nsector saving was \"critical at this juncture\" due to falling
\ncorporate profits and falling household saving.<\/p>\n
\"However, as the government is based on a loose coalition of
\nparties, its ability to implement these budget cuts, or make any
\nfurther fiscal adjustments that might be necessary, may be
\nconstrained by political realities,\" it said.<\/p>\n
The statement said the Bank of Thailand was maintaining a
\ntight monetary policy but the high interest rates were
\n\"accentuating the financial pressure being felt by domestic
\neconomic agents as well as continuing to serve as a magnet for
\nspeculative and potentially destabilizing short-term capital
\ninflows.<\/p>\n
\"Differences at the highest policy-making levels regarding the
\nappropriateness of existing exchange rate and other policies are
\nalso eroding confidence in macroeconomic management.\"<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/review-for-thai-credit-rating-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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