RESTRICTED Report No. FE-40a Tk; rannrr wne nrannred fer ims whn the Rank and it n afFiled nrnaniations They do not accept responsibility for its accuracy or completeness. The report may nat be raulished n; mn , he a.asse ronroen tnn *a,r viws INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION CURRENT ECONOMIC POSITION AND PROSPECTS THAILAND Iovember 10, 16 Department of Operations Far East CURRENCY EQUIVALENTS Currency Unit -bahit U. S. $1 = i 20. 84 v 1 = U. S. $0. 048 Vi 1 million = U. S. $48, 000 Table of Contents Chater r 0n an Basic Data Summary and Conclusion ....................... i I. The Social and Political Framework............ 1 II. Recent Economic Performance................... 2 Income, Expenditure and Savings............ 3 Internal Finance......................... III. The Main Development Problems and the LW.viU 2ycvyJAJ U -jL-LU Vooe *********** U The Demographic Outlook.................... 6 TiJorLU 41arrlAU kC UU t- r A .. - UL ti.AJui 00****** [ f The Level and Efficiency of Investent..... 8 tnL Th.Al -' C-. 4.L-P. -4 Public Sector Plans....................... 9 IV. Prospects for Output and Income...........1... i'griculture.......... ..... ............ . 14 Other Grops................................L Livestock, Forestry and Fishing............ 16 Mining...................*6..17 Manufacturing........... ......... .......... 17 Other Sectors & Overall output............ 18 V. Financing Development.................. . 19 The Overall Pattern of Expenditure and Finance............................... 19 Financing Public Sector Development....... 20 The Central Government.......o....... 20 State Enterprises ...................... 21 Local Governments....................... 22 Foreign Financing................... 22 Bank Credit, oxchange Reserves and New Taxes......... ..................... 24 Financing ?rivate Investment and the Overall Monetary Balance................... 2 External Finance........................... 25 B SIC DATA Area: 514,000 sq. km (200,000 sq. miles) Population: 30.3 million mid-1964 estimate Growth rate: 3.37 p.a. GNP total: 7,64.8 billion (in 1963) Per capita: ý2270 (US §; 110) This is the official esti ate converted at the offi ial exchange rate and is probably an underestimate Grwth rate: in onutnut 6,2% p.. 196/58 - 1961/63 Growth rnte in export voluine: 6.25 p.a. 1956/AR - 1961/63 Rate~~~ of- avn:ealfiie:1.%95---6 Adjusted recent years: 15.2% 1962-1963 ( GNP by Industrial origin (1962 prices) 1957 1963 (niIio n nnaht) Il" 66.5 % distribution gr iceultU re 03 Manufacturing, Mining & Construction 18 19 All ote h2 o Total 7 10 Expenditure Pattern 1957 1963 Consumption i-ULJ-L-LU ..Lu , u 74.7 Private 74.5 71.5 Fixed Inves tment Public 4.7 7.1 Private 10.71/ 12.-L/ Change in stocks 1.8 2.3 Currenit D-.Leci -.7 --3.1 10o 100 Exports (1962 prices) Value (Billion Baht) 7.8 9.8 7 distribution Rice 52 38 Rubbe r 19 20 Corn 1 8 Tin 8 8 Kenaf & Tapioca 2 8 All other 18 18 Total: 100 100 1/ Overstated by inclusion of outlays on repairs and maintenance. 1957 1963 Central Oovernment Budget (Bii12 i'Ba fitt Revenue 5.08 8.64 Expenditure 5.65 9,16 Deficit (adjusted) -0,4 -0.33 Fi-na-nced byx: Hon inflationary sources: 0.07 0.45 Inflationary borro ing: 0.3 -.1 2 one S (illion Suaht 8 . 11 0 Net Foreign J\ssets (Million .S ) 321 6 ui ExenJt U i i U - E Septemer- 1 96 1 U.-L-L LXå Ut-,J. I ICL-L te Lký U 'ýiiiƱL-UII l) -L_ 4:. _)U; 1/ E-nd septer,,"hr 1964. Summ ary and Conclusions 1. Thailandrs growth of output has accelerated recently to about o.y, annually, as compared with a 5 rate in the decade of the fifties. A major factor has been a large growth in the volume of exports, led by corn, kenaf and tapioca. 19h4 is proving to be a record export year with the traditional exports - rice, rubber, and tin - also up sharply. 2. This new export level can probably be maintained and increased moderately over the next few years. However, the growth rate will almost certainly slow down considerably because of probable declines in export prices, mainly in rubber and because of supply limitations in the case of rice and corn. This is likely to lead to a moderately slower growth in real inccme than in the past five years. To ensure a recovery of the overall growth rate in the longer-run will require further increases in the development effort. 3. Impressive increases have bcen achieved in investment and savings over the past five years and further increases seem quite possible. Late in 1963, the Government approved a Three Year Development Plan for 1964-66 which called for a 70% increase in public capital outlays over the 1961-63 period. In the light of developmentssince the Plan was approved, it is clear that an increase on this scale cannot be achieved, mainly because of slow progress in project preparation and implementation. Significant progress has been made along these lines in recent years, but further progress will be required to achieve even more moderate increases. The most that seems feasible on technical and administrative grounds at present would be an increase of around 60, between the 1961-63 average and 1966-68. Even this is by no means certain, but it does seem within the bounds of possibility if a concerted effort is made to improve further the administration of development and to make greater use of outside consultants and contractors. i. Financine' such an increase in outlays along with the sharn rise in current development outlays would probably require an increased tax effort as well as greater use of external financing. Both should be feasible. Some draw-down in the rresent high level of foreign exchange reserves could be used in the next four years to sunlement other resources, TIowever, mqp of Py.hq nan -~rPqPmr.. wil I I e to hp kePnt. wuithi n prudent limits,.and Thailand could begin to have a difficult external financing nprblem h the PnH of the o'ndclp3 if P.Ynort arowth Ios not nelerate aPain, and if the great part of foreign financing utilized in the meantime were on conventional terms Mintaining n growth of imnorts adeuate tn sustair satisfactory rate of overall growth under these conditions would probably roriiii -P c:+. 1 , -irx i i~~C - n na 1-. fn-vrc an t,nn r I ~ i n fl nuT T-N+Jqh t yi-io rising progressively, the gross inflow required would rise to magnitudes which wouildA prb-l-ly pr ct cal~c pAc I-)i r'1 i +ia nQ Wnw I rn 1 i 'r n r, -zi "ni V, -N"n i of the inflows were financed on easier terms, the gross requirements would ar 1 1- em of thl, 4 i -A -4 - m 4gitde F eo 1rowh cl L o re a ue t co cl d VLL U ~ uliIc t'LIj _L ~.UiLU UIL. u ±iIe±IeLULLi "-L.L _L11 O U a problem of this ragnitude. For export growth could turn out to be falster than prtesently proCC)Jected, and theU inLUCases of _ivestmentII - andu abtU_I,y to - ii - absorb foreign capital effectively - may be lower. It should be possible to make a better judgment on these proopects within the next two years or' so, ith respect to the latter, a major test will be whether Thailand can substantially increase its rate of progress in project preparation and implementation in the next two years. In the meantime Thailand still has ample creditworthiness for additional borrowing on conventional terms. T . Thp Sonial Pnd Politinal Framework I_ n-,rr t.h-rnq +.'[Tr) ript-rlo- Thnilnnti hn q _nnhip7rpri -n ronn-rrl of impressive economic groi.th against a background of comparative social 0-- One basic-factor- +-;c th4sr-r+ has bee the ample supply of arable land relative to population, and the easy access to LJUfl .i.OLJX. I1CA~ V'.OOLL .LI "C L±J. L CAA4I. U.LJ4JQ 0 L11JJ- L ..~,uJ. J.±AI *itA LL.L i a high degree of land o-nership among farm families, and a steady expansion . acrag un'-der cu±itivation1. JLI-L 11jdL ii o PCLYU cz IIdJ UI _L.L I 1 meeting the income and employment requirements of a population which is still nearly buzo rural and which is growing at over 31 annual.Ly -) Another important factor has been the homogeneous nature of society, and its ability to absorb non-Thai elements. This has meant much less social friction than exists in many other countries of the region. Although there are a number of dialects, the vast majority of the 30 million people in Thailand can communicate readily with each other, and 50o share a belief in some form of Buddhism. Partly because of this homogeneity, the Thais are comparatively mobile and move more freely to new land and new employment than is characteristic of most countries in the region. 4. By far the most important ethnic minority is the Chinese, most of whom are now citizens. They account for around 10%S of the population and play a major role in the commercial and industrial activities of the country. Many of the Chinese still remain separate from the rest of the community, but the extent of their integration is far greater in Thailand than most coun- tries of the region. This process has been facilitated both by Thai laws concerning schooling and by the similarities between the Thai and Chinese in their physical appearance and in their religious persuasion. 5. Equally important has been the gradual intermixture of Thai cultural traditions and Western ideas which has taken place without the complications and resentments arising from a history of colonial domination. This has been accompanied by a sense of independence, self-confidence and openness towards the West. 6. Despite frequent changes in the governing regime and shifts in rersonalities at the top. there have been imnortant elements of continuity and stability in the political sphere. Basic policies have remained much the same. both with resnect to external affairs and internal nolitics. A maior stabilizing influence continues to be widespread respect for the King and the conservative traditions deriving from the monarchy. Closely related is the high respect accorded to civil servants and their ability to influence govern- ment enonomin nolici. Finallv thr Pmroonnp of a modern busin. ooqrnmmunity has brought growing pressure for greater predictability in government behavior. hI + oc 7-"mNna i -n,l]di ner +hno mi I i ir+ Ii r an +tqn M crin Vn+.o rof ornnmrni r growth as a primary aim of national policy, although as in most societies, there o 4f benfits.k - v -4 a a 1,10 approriae uLon of the benefits. - 2 - II. Recent Economic Performance '7 T,, ',- . --c+ ., J .1- 1 3I 1 -~+,_II+ I, , ~rnnn, irn 'h-r around 6.59 annually, as compared with a 51 growth rate in the previous six plhu, despite -nace-leratIon intepJton+growt rate fromr around 2.3% in the early 1950s to about 3.3% at present, per capita incomeIhas r 1.LQIZ;I LV_Li_LY 0 U _I-LLY l c 1iL l 0kA-.LIU C u C I.uLLu I.~~~~~~~~~~~~~ ULI UiU ,IdUC UL1IU IULIJ cl ru LI U 11 l ID CId UI A I ICLV been a healthy export expansion and a marked rise in investment and current government out-layrs on deelpmnt !,t th -am tie fiaca stability1 - --1-* 44 has been well maintained as the result of increases in domestic savings anu large .foreign capiDtIal nfiow. CutDut 9. An acceleration in the growth rate of agricultural output ha played a major role in the recent expansion of total output. The paddy crop in the past four years (1961-64) has averaged 8.7 million tons, as compared with averages of 7.2 million in the early 1950s and 7.1 million in the late fifties. The 1-6o3/4 crop exceeded 96 million tons and pre- liminary reports indicate the 1964/65 crop may be just as good. Part of the increase in rice output is accounted for by exceptionally good growing weather, especially in the Hortheast. Even more important has been the expansion of other crops. In the aggregate, their growth rate increasea to 6.5% annually between 1956-59 and 1961-64 as against 5.3% in the preced- ing five years, with the "new" export crops - maize, kenaf and tapioca - leading the way. An increase in land under cultivation has been a major factor in the rise of agricultural output over the past twelve years. Land under cultivation rose by around 28% between 1950 and 1962. The greater part of this expansion has taken place in the past six years. Although land planted in paddy has increased on the average by 1.5% annually, it has declined sharply as a percentage of the total crop area - from nearly 90% in 1950 to 85% in 1957 and to 785 in 1963. At the same time, acreage planted in other crops expanded by 35% between 1950 and 1957, and by another 50 between 1957 and 1963. Overall, agricultural output went up by nearly 5% annually in the past five years, as against less than 3% in the previous five. 10. Mining and manufacturing have also experienced an acceleration in output, particularly in the last four years. The official national ac-ounts estimatec show an average growth of 10% in both sectors since 1959. Th4se sectors together now account for about 11% of GNP excluding rice milling and saw milling, which contribute another 3%. There is every reason to believe manufacturing growth is continuing at a high rate in 1964, as several new plants, including an oil refinery and a large tire factory, started operations in the course of the year. Construction and transport- ation activities have maintained high growth rates (estimated at over 10%) in the past five years, reflecting the expansion of investment and of domestic travel. Public administration and the Drivate service sectors have grown steadily at around 6% throughout most of the past decade. - 3- Income, Excenditure and Savings 11. Since the nid 1950's, Thailandfs real income has grown somewhat more slowly than output because of a deterioration in the termns of trade.. Export prices have declined about 107 since 1956-57. However, tho impact on national income was quite moderate, and real incomes probably rose by around 6, annually between the mid 1950s and 1963. With domestic prices rising at less than 2, a year since 1956-57, national income at current prices has gone up at an average rate of just over 75. Investnent has gone up slightly faster than savings, with the difference refected in a rise in the foreign deficit from around 17 of GNP in 1956-57 to 37 in 1963. 12. As measured by the official estirates, total investrient averaged around 20 of GNP in 1959-62 and nearly 22% in 1963, as against 165 in 1956-57 and less in the early 50s. However, by international definitions, these estimEtes are overstated by perhaps 10-15> because of the inclusion of substantial expenditures on repairs and maintenance. Moreover, GNP is underestimated by at least 55 because of the low valuation of rice consunmed domestically. Adjusted roughly to an internationally comparable basis, the Thai investment rates would show averages of about 14' in 1956-57, 177 in 1959-62 and 197 in 1963. The sharpest increase has been in nublic fixed investment, which has nore than doubled since 1957 as comrred with a 65< rise in private investment over the sare period. However, the private sector still accounts for two-thirds of the total. 13. As noted, national savings have not risen as rapidly as investment in recent years. On an adjusted basis, the rate went up from 13' in 1956- 57 to over 157 in 1960-61, and has renained there in the past two years. The recent stabjization of the savings rate reflects the return to normal growth after the exceptionally sharp rise between 1958 and 1961 which was closely associated with a boom in exports in those years. In 1962 and 1963 both investrent and imnorts rose ranidly, while exports growth was much slower. However, 1964 appears to be cnother very good export year, while imnorts nndi inve.st,meP.nt hnvp continued to rise rapidly. External Finnnce 11. Tn both 1960 and 1961 exports of goods and services rose by 157 reaching a level of 45h0 million in the latter year, sone I07 above the 1956-58 level. 1962 end 1963 showed n nih qlower growth. Thn grouth between 1956-53 and 1961-63 is rainly due to a h5J expansion in the volume of oercrhad prts. All the traditinnl ennrts - rice, rubber and tin - were moderately higher in the past few years than in 1956-58, but the nein boost came from the new exports: mnize, kenf and tapioca. In total, tn export volume of this group has expanded seven fold since 1956-57. As noted, expor prices have fa11en i- r 10 nn th av-ergn inoce 195-_ 57. This is nainly due to a 30% decline in rubber prices. Thus, on -a«lance, the value of merchand isÖe Cx-po0r ts S risenV-1- by 33 n1 the, past fie years (56-58 to 61-6.3). In the first half of 1964, exports were at a record rate, cq6. 2 V5 ove thsC first Ui -L 19U, alälIL1Ly UCUse of L.ruge volume increases in rice, rubber and maize, and high tin prices. There hns also been a large expansion of iIvisible earnings over the past several years - from an avel.age of about i37 million (in 1956-58) to one $85 mil- lion (vn 196v6) kbout a thiru of Wi6 increase consists of purcnases of services by the U.S. military forces, another third is accounted for . Import value went up on the average by only o70 annually between 1956-58 and 1961, but has risen by 10% in each of the past two years, and was continuing to grow at an even higher rate in the first half of 190o. Machinery and transport equipment have been by far the most dynamic component in import growth. In 19O, they were over twice the 1y>o-5o level, accounting for 31% of total imports, as against 22% in the latter period. Part of this growth has been accounted for by consumer durables, particularly passenger automobiles and television equipment, but by far the major part has been for investment. Imports of food and manufactures continued to drop as a proportion of the total. 16. Thailand has generally free exchange system, although it has recently introduced several protective tariffs and a few quotas for purposes of encouraging domestic manufacturing. Exchange is readily made available for current transactions, but large capital transfers need special author- ization from the Bank of Thailand. From 1955 until late 1963, Thailand maintained a floating exchange rate, but the rate hardly ever floated by more than 3% away from % 21 to the dollar, because of stable domestic financial conditions. In October 1963, Thailand set a par value of 20.8:1. 17. Thailand has had a current account surplus only twice in the past 15 years, the first during the Korean boom of 1951, the second during 1961. In the fcur years prior to 1963, the current deficit totalled $135 million after allowing for the small surplus of 1961. In 1963, the deficit grew to $100 million and appeared to be continuing at nearly the same rate in the first half of 1964. However, foreign capital inflow has consistently exceeded the current deficit since 1958 so that foreign exchange reserves have risen in each of the last five years. By the end of 1963, they were up to $540 million as against $300 million at the end of 1958, and by September 1964, they stood at $605 million, the equivalent of one yearts imports., 18. Long-term private capital inflow reached $17 million in 1963 or just about the same amount as in the four previous years combined. This mainly reflected large investments by Shell in the new oil refinery and by Firestone in a tire factory, as well as a number of smaller investments. Grant assistance reached $50 million in 1963 (mainly from the U.S.) against an average of about $35 million in the four preceding years. as disbursements on several long delayed projects in telecommuni- cations and highway development were largely completed. New commitments of grant aid from all sources are now down to $20-425 million annually. The largest part of capital inflow has consisted of loans to both the nublin and orivate sectors. External debt of the public sector rose by $145 million between the end of 1959 and 1963, while private external debt went un by %- milIn Of the 19Al million tot.l - A1) million ha been incurred in the past two years. It continued to increase at this rate ~trug 'J4the first. Yalf of 19. By the enq of 1963, Thailand's public external debt was up to nhoit .,1A mil1,nr1/ . inrlding over .1 0 million undisbur3ed, while diR- bursed private debt covered by Eank of Thailand exchange guarantees stood at - 70 millionm Tlie latter TiA i)nensed AO$0 miln1-1t rnr11OJ, SeP.r- vice on the combined total will fall from $52 million or BK of exports in 10A), to .) 4-6~li~ 10AR * - 0+' thse oft ecoOtt;V ing private debt is estimated at about 226 million in 1964 and $10 million in loAA~ June 1964) have maintained the pattern of stability characteristic of the previouU fIve yer. In te reLent periou, tne money supply roSe at a season- ally adjusted annual rate of 70. or just about the same as the growth rate of national income, in spite of the growth of exchange reserves correspond.ing to 20o of the end of 1962 money supply. The strong financial position of the past six years can be attributed in part to the rapid growth of government revenues. Between 1957 and 1961 revenues rose by 526, leading to a shift from a budget. deficit to a surplus which, together with increased non-infla- tionary public borrowings, had a large negative impact on the mcney supply in 1960, 1961 and 1962. Between 1961 and 1963, the growth in budget expendi- tures - mainly on development - rose to over 11% annually, while growth in revenues slowed down to 7%0. The result was a cash deficit in 1963 which had to be financed partly by a small amount of bank credit for the first time since 1959. In the first six months of 1964, the public sector again had a strong negative impact on the money supply, as expenditures levelled off, while revenues were up by 10% over the corresponding period of 1963. A major factor in the recent revenue increase was a larger receipts from customs duties deriving from the record level of foreign trade reached in the first half, 21, Another important factor in recent financial strength has been the rapid growth of time and savings deposits and the capital accounts of the banks. Gross credit to the private sector has been expanding fairly steadily at an average rate of 15% in the past five years. However, during the past two and a half years, increases in quasi-money and capital accounts have been even faster. and have more than offset the impact of this expansion on the money supply. The banking system is now in a very liquid position. "Black market" interest rates on time and savings deposits have larrelv disarneared. and the general level of lending bank rates has reportedly come down, by as much as one-narter within the nast var or t.wo J-A from a previous range of 15-20% to one of 12-15% today. Price increases have not been significant. / Includes u m11m0n repayaue in local currency or uolulars a' theupu of Thailand. / The actual increase in thi 1o-month period was only 70 - 6 - III. The Main Development Problems and the 1-ul dc.L. 1 . LJ~t±}i1 U 'Q111 ort As inucauea in te foregoing chapter, inaanu rc u u performance has been quite impressive on almost all counts. A satisfactory growth rate in exports earnings and real income has been achieved despite a fall in export prices. The investment rate has been steadily increased. The savings rate has grown significantly in the past five years, and is now comparatively high for a country at Thailand's income level. External debt has risen, but external reserves have risen by just about the same amount, and peak service on existing debt will not exceed 10% of 1963 export earnings. Internal financial stability has been well maintained. 23. However, with per capita income at only )110, Thailand can hardly afford to rest on past laurels. The problems of maintaining adequate increases in per capita income in the next five to ten years will in some respects be more difficult than those of the past decade. The main problems arise from the rapid growth of population and labor force, from uncertainties about the world market for Thailand's main exports, and from factors lim:Lt- ing the level and efficiency of investment. The Demographic Outlook 24. As in most developing countries, the growth rate has accelerated sharply since the war as the result of public health programs which have reduced the death rate, particularly infant mortality. The natural growth rate is estimated to have risen from about 1.7% in the immediate prewar period to 2c,3o in the early 1950s and 3.3% at present. Assuming constant fertility and a moderate decline in mortality, the rate is likely to rise to 3.5% by 1970. This rapid increase in the growth rate has already had a major impact on education requirements. It will soon be felt in a major way in the need for jobs and housing, as the large increase in the younger age groups is reflected in a rapid increase in the age groups of working age and marriageable age. The economically active population over age l is projected to increase by an average of hO,OCO per year between 1960 and 1970, or just about fYo more than the average growth in the previous ten years. Similarly, the annual rate of household formation may be expected to rise from around 90,CO in 1960 to 130,COO by 1970. 25. It seems inevitable that the growth of population, labor force and households will continue to be more rapid in urban areas than in the countryside. Indeed, the shift to urban areas may well accelerate. The Ban7kok-Thonburi area. which now has a poPulation of 2.5 million, expanded by around 4t.o a year between 1947 and 1960 when the over-all population growth was less than .01. It would be surorisinL if the rate of increase in urban areas is not already over 4.5%. It is in the urban areas that the reqiirPmnts for housing and imroved nublic servicns will be most urgent. Nevertheless, it will still be necessary to find new employment ~n cri t1,i~ f ny,Evv +Iipj nn+ n-v -I- -P +Iio -nni1n+.inn n +31C. np+ [_10 V0 r5! If total non-agricultural employment were to expand by 5% a year over the bext necery, n ao the Nrojct 0 2.< ni0-itnllr girowt Tacrl e+ 11 be necessary to absorb the projected 2.8% in total growth. To achieve this - 7 - without depressing per capita farm income will require both increasing yields per acre and increasing the eage of Innid under ultivation. Indeed, the need to identify new land suitable for agriculture and to open it. i fer developnment is one of the mo.t rent renirements for thp rxt decade. World Market Outlook for Exports 26. Another problem facing Thailand is the uncertain world market able diversification in exports, the Thai economy is not as vulnerable as term prospects for most of the commodities which now rank among the top O.ix arez Ll for 1-.LaL.' _LUW-'.E ;oJe . L-_L';UoU I uWI '1V' P.J-t-VCLL.tU L11 U111c; pao U Y:C or two, 27. In the post war period, Thailand has normally provided about a quarter of world rice exports. However, worLa exports are equvalent to only 9% of world production, and there are only a few major import markets, mostly in the Far East, most of which control imports tightly while striving for self-sufficiency themselves (so far without notable success). Partly because of these controls and partly because of a fairly stable export supply, world export prices have moved within a narrow range of $1CO-125 per ton for the past five years. In 1962, the price was at the high end of this range, and in 1963 fell to about $115. The best guess that can be made at present is that, even with moderate increases in total world export supplies, the price will average around $110 a ton for the next five years or so, 28. Thailand is now the world's third largest producer of natural rubber. World rubber prices have been falling steadily since 1960 under the impact of the rapid expansion of synthetic production. From what is known of production costs of synthetic and natural rubber, it is estimated the equilibrium price for the late 1960s is likely to be around 20 cents a pound in the United States. This means that the export prices for Thailand should level off at the equivalent of U.S. 17-1 cents a pound, as against 24 cents in 1962 and 22 cents in 1963. If synthetic technology were to improve substantially, the price could fall still lower in the longer run. 29. Tin prices have recently risen to $2.10 a pound, mainly because of supply limitations. However, as larger releases from the U.S. stockpile are always possible, it seems reasonable to expect that prices will soon fall, although they may well level off at a somewhat higher price than the $1.10 a pound average for 1961-63. Long-term growth in world consumption is not expected to exceed 2% a year. Indeed, price increases such as the recent one could slow the growth rate even more, since they provide a major incentive to develop substitutes and to speed up the tendency towards economizing on tin, 30. Prospects are also that export prices for maize will tend to drift downwards moderately as comnetition grows amon the maior sunnliers. However. much depends on the price supports and export subsidies which the U.S. is willin7 to Drovide its Prowers. Nevertheless. iud-in7 from the recent ra.id growth in maize imports of Couth East Asia (especially Japan, Hongkong and Sin;a-ore). nrosnects for maintainin., a owinp volume of Thai e xnorts are good, provided that production can be expanded on an efficient basis. 31. For the past several years Thai kenaf prices have been high when world prndution has been low, and viHc vr Tnng-rnn prospets are nlite uncertain, given competition from synthetics, although Thai kenaf has P nn r 1n ~r-nn.+A +.-i- orm on +.,c na~bcas f certa+in rm-n1i+: advantages. The last of Thailandts six major exports is tapioca, which has eX.-n1--J- Ced st+vrongr d-e-and -,n Mecer-nt- years - fo S - in +I- TT' M,n-rr+ nA for animal feed in Europe. Competition from substitutes and a new common future. 32. A number of commodities which Thailand now exports in small market situation simply because the magnitues are now so small that they wou.ld.4 scac e~ ly- ,f4.LZC4U W,UrL pr1Ce ZU~~ VE:11 WIW t: Vly -LCt.LE-' I~ It.UtC in export volume. However, the key question with respect to these commodities, aU LIUeuU L.-L U L, UoL tne major exports iscussed above, wielner prouuUU- ion can be increased at a rate which will offset the downward drift in average export prices. The Level and Efficiency of investment 33. As noted earlier, Thailand has achieved rates of investment in recent years which are quite respectable by international standards. Moreover, with real output growth averaging around 0.570 in the past five or six years, the efficiency of total investment appears to have been reasonably satisfactory. The ratio of fixed capital to output for 1957-1963 was about 2.5:1, after adjusting for the overstatement of investment in the official investment estimates. however, much of the output in this period was the result of investments made earlier, particularly in irrigation and transportation, and there has been some running down of the capital stock of these facilities through inadequate maintenance. In addition, the large areas of virgin land opened up in the period have permitted comparatively high yields to be obtained in the new crops, but soil fertility is now declining significantly in those areas. The investments required to open up new land will be comparatively greater than in the past because the most accessible areas are already in use. Moreover, to maintain productivity in existing cultivated areas will reauire increasing use of fertilizer and expanded public support in research and extepsion. The simpler forms of import substitution in manufacturing will oon be largely exploited, requiring greater investments in more complicated and more capital intensive types of production if the momentum is to be maintained in this sector. 34. There are, of course, important instances where investments made in the past five years have only started to yield substantial returns in the past year or two. This is particularly true of several important irrigation and power projects, where the full returns will not be reached for several more years. Moreover, imoroved efficiency should be possible -9- in manufacturing which has been handicanped in the past by lack of experience in the private sector and by a nuiber of highly inefficient investments by the public sector. But, when account is also taken of tile need to expard investment in such sectors as education, housing and other urban facilities, it is difficult to avoid the conclusion that investment will ten to rise relative to output in the next five years. Taken together with the probable deterioration in terms of trade, this means a significant increase in the total development effort will be required if anything like the recent rate of income growth is to be maintained in the next five or ten years. To achieve this, important further improvements in public administration and in public policies supporting economic development will be necessary. Such improvement is possible, but will not be easy. ITe Public Sector Development Effort 35. The Government has become increasingly aware of the country's development problems in recent years, and has taken a number of steps to increase the level of investment and to improve its efficiency. As noted public sector investment has more than doubled since 1957, and in the past few years current outlays in development have also increased rapidly. Government encouragement to private investment has also borne fruit in recent years, particularly in the manufacturing sector. 36. A start has also been made on economic planning. At the request of the government, a World Bank Survey Mission prepared in 1958 a public sector develoDment orozram for 1959-63. which was followed auite closely as a guide to public investment. In 1959, the*government established the National Oconomic Eevelopment Board as its main agency for coordination of the development programs and policies. In 1960, the NEDB produced a plan outline for the central government covering the neriod 1961-66. and in late 1963, it approved a revised and amplified version for 1964-66 which covers the entire nublic sector. The NEn has aso made Rt-rt onxmanpower planning and on progress reporting to help ensure prompt implementation. 37. Since 1959, there has also been a considerable strengthening of t,thpr PvPrnmnnt1 ngencies .ith imnortant rolp. in r1vlnTment noliev and implementation, including the Budget Bureau, the Central Bank, and the Ministry of Finance. A number of +.he main oevating agencies have bnen grouped together under a strong PfLnistry of National Development, which also, has. reposiilt for oorinaing foreicyn aid. Therevv still re, main many inefficiencies in the planning and implementation process, but the imoements of the past five years have been substanti1, ju. Iiie -yu7 u_u n41taVonLjL rk;)111_L cum i !Le upmen;lu rI-21 LO quA.ve amvi.vU.UUO in its overall magnitudes. It calls for an increase in total developimnt spending of more than uzo over the estUmateu 1yu-6V level. Major increae are proposed for all sectors except power and manufacturing, with the most important being agriculture, transportation, education and community facilities. A summary of the projections is shown below: L0 - The 1ational Economic ~evelop-ment Plan, 1961-66 f_ - , 1~ -~ - i 1 4- % Fiscal Years 1961-63 1964-66 Agriculture 1.7 3.0 Indtuszr, mining and commerce 1.0 1.2 Power 2.3 1.8 T'ransportation and comnunications 3.2 7,0 Education 0.7 1.8 iea-Lth U.( 1.0 Community facilities and welfare 1.7 3.7 Other 0.7 0.8 Total: 12.0 20.3 Both for financing and impleentation, the plan depends heavily on major increases in use of foreign loans, although it takes account of the reduction iLn grant funds which is now occurring. A major increase in domestic financing is also projected as follows: Financing by Main Sources of Funds (billion baht) 1961-63 1964-66 Foreign grants 1.9 1.6 Foreign loans 2.2 5.0 Domestic resources 7.9 13.7 12.0 20.3 39. On the basis of developments since the plan was prepared, itis no virtually certain that it will not be possible to achieve the expenditure targets of the plan. The ain shortfall is like-l to be in riS'ursments on projects for which foreign financing has been arranged or is intended., During fiscal 1964, .disbursements on exiSting loans were very slow, as the result of a.dinistrative delays and revisions in a nunber of the projects, ioreover, only two small Lopns were contracted during that year, and were more 1/ The fIgUrU in t,islm UU reWIIII esetUUUU eiWLte Ior tUI period from January 1, 1961 through September 1963 and are higher than actual outlays for that period. However, they come quite close to acuual expenditure in the full three-year period from October 1, 1960 through September 1963. 2/ The figure: given in the -Plan document is /0.h billion, but this excludes about Y3300 million of current exrerditure rhich need to be included for corparability with the projection. -.11 - +n,a, ffe. kw U a .li,+4 J- (I m44lnn -r"^m +Iho TPpn h Given the long disbursement period probable for most of the major loans with the elimination of some of the existing bottlenecks, disbursements dO ± avL t iiu W4I.pk U.L- 1,)UV. iIILLLJ..LV1Ui -I~Ly ±U L W4'4J J± AL, compared with the $83 million average called for in the Plan. This implies a roughly curresponuing 01iu1rULscAL A1 Uumeon eUxJuL1± Ur. UIW n1e prUJtoa involving this borrowing so that total expenditure for the three years is likely to0 be r-2 e2L/ leS ThM11 C it would somewhat reduce the growth of outout in the interim. The medium 'n outlook is for an expansion of rubber output to about 250,000 tons by 19(:. and for maintenance of exnort earnings at about the 1961 Tevel ofY 2. Oilion as the result of the expected continued price decline. 53. Corn has shown the most spectacular development of all the new crops- rlsino frnm 40n 0 t.n. in th first half r)f i-hp 19n.0s to nhnnt. nne million tons in the crop year 1963/64. This expansion follows the intrcduction of P htb-ric devonPed undera oint. Thni rnvernment-.H overnment - Rockefeller Foundation research program. The main market is Japan but sales to Si napre Tngglnd F uop haenlsoo- esbsaA in the. Inc + two years. These markets are likely to continue to expand at a healthy pace. 5h. However, the corn industry faces an important problem in the cecline of yield 1 ,T11c has) been1 occurring as dC~~O U'~ -P -F-t~L -+ -;J 4 - 1 4 UJ- which occurs after the first few years of production. Thus far, expansion of'Jr ea - Ila-o tha UI o ffse -t'Ali SC , DL uJ t' t - 11 IL - LIi U UU o ~ 2 L acceSS4- ~ e an V.r41J- slow the rate of expansion in the next few years. The research group has Ueer, wolri i onII 1 le devCeC.opment, of U-. VT -V31rLt U.Lt: WJJIL-ull vJL_L _tz;opu1lu UU iLt:.L U.IL_ izers and prospects are good for success within a few years. However, it will 1soU Ue impijortn toII open UICIup J UU _L t1J11 UUUUIUII -L. LU1UU1Uk-U advantage is to be taken of the rapid growth of demand. 55. Kenaf, which corresponds to low quality jute, has been Frown for some years in theiu 1111*teUb( reUgion.e :tgleL theu Paki stan crop faled_LLU inL1601 world prices went up sharply bringing about a large increase in Thailand's export earnings, and later (with a one year lag) in output. Export value in 1961 ranked third among the major export commodities, but by 1962 when Thai output was up 'o over 1961, the pr:Lce had fallen sharply and export earn- ings fell by 5'. As a result, output fell, and export value in 1963 was back - 16 - to the 1961 level. Nevertheless, soie neu uses are being developed for jute and kanf (c' rt rn c ting etc.) and u-orld Jenand is going up i:odorately. Chances appealr rCsonably good that Thciland can ruintain its current shar,3 o.f the ';ar1 i ;h severage cxport values at around $500 or 0600 million annually. 56. Tapioca began to become an inportant export in the mid 1950s (over Y100 million a year) and in the period 1961-64 had risen to over Yh00 million annually. Demand has been mainly from the United States where it is used for starch and from Europe where its main use is animal feed. U.S. demand has weakened recently and the recent imposition of a high import duty by the EC has hurt sales in Germany. However, an increase in sales to the Hetherlands and other markets has offset these developnents. The best guess at the present is that export earnings will grow only moderately in the mediun-term future. 57. In 1963, all other crops combined were valued at about 07.0 billion out of the total crou nroduction valued at Å17,3 billion (rice accounted for 7.6 billion while rubber, corn, kenaf and tapioca accounted for /2.7 billion). The most important in terms of value are sugarcane, coconuts, fruits and vegetables. The great part of this output goes into dom,estic consumption. Total output has been increasing at int. about the qnme rate as nonulation growth in recent years, but the growth rate has been held down by a substantial fall in production nf cunrrne which was overplanted in the mi-1950s. As output of this crop stabilizes total output of the group should rise at a faster rate. The export component has been ri ing qsi i rfntly - frön about 0450 million in 1957-59 to around /750 million in 1963. Of this increase, about 100 million is accounted for by sugar which is not likely to be continued with the drop in world prices. The remainder represents a -atte-n of growth that could well e yain in the futur e.i +kn- t1 most promising items are castor beans, mung beans, peanuts, soybeans, tobacco, ban anas anc -paIM oLL. -I.ncread nroLc tio po0SS LG J-ibili teS for many of tese crops iill be greatly enhanced by the irrigation projects now plEnned or under- way, which will provide enough water on large areas to grow them in the dry season..Hwever,a considerablc intensification of research and extension work will be necessary to take full advantage of the potential for increased output anu sales of these crops. It would seeir quite possible that the overall Uroth1 rate for this, gru p~ of* -rp cou_l rie to .5- durig the next rC A- five VO years, with a significantly faster growth in the export component. Livestock, Forestry & Fishing 58. output of livestock products (which accounts for 7% of total agricultural production) has been stagnant in recent years, in part because of doestic and external marketing difficulties. Efforts are being made to overcome these and assuming success on this point, it would be reasonable to project a recovery of exports and renewed growth in total output at around 47 a year or more. The decline in forestry output in recent years is due to a drop in teak output which has been enforced as the result of overcutting in the past. As a result, the contribution of forestry to GHP has fallen from /1.7 billion in the mid 1950s to 01.3 billion in 1963 and exports have dropped from Z360 million to /200 million in the same period. At least a moderate growth in output should take place over the next five to - 17 - ten years if land clearance for agricultural production takes place on the scale which seems desirable. Much land ;h.ich is still under forest would be suitable for agriculture. Fishing output has expanded at a rapid rate in recent years as the result of a large increase in the marine catch; this has been made possible in large part by greatly expanded motorization of the fishing fleet. Mining 59. Tin is the only mineral of any importance produced in Thailand. Since the cut back in production to 92000 tons enforced in 1958 under the International Tin Agreement, production has increased rapidly, surpassing the nrevious neak of 19.000 in 1962 and reaching a rate of 22.000 tons in 1963. The latter brought in 70 million of export earnings. Plthough output is un only moderately in 196) - exnort Parnin-s my well rpach V1 000 million this year as the result of the very high prices prevailing since January. The -rprpn. n-rie- lovl rqn hrdlyir 1,e minhpined fo-r vprr Innry- ai ven tho obvious possibility of larger sales from the U.S. stockpile. As a rough approxiatn ionn, " prices migh bei 'proe cted top A t ii +nc+n nn+. n -ii,- ni i ailI'nnnn or less on the next several years. With the possibility of continued growth in Thai. Output of around 14-% or 5% annually, 13-y' tin might still be 1000 million five years from now. Manufacturing 60. In 1963, according to the official statistics, value added by manufacturing accounted for 12/ of the nauional product. However, over one- fourth of this was accounted for by rice milling and saw milling. Output of tue latter has almost certainly gone Up very slowly, wonIowjng trenu in rice output and lumber production. The remainder is estimated in the official national accounts to have risen by around 67 annually in the decaue of the 50s and by 10% annually since 1959. The latter growth rate seems quite plausible in view of the indicators of investment which are available. Indeed, it, would not be surprising if the actual growth rate were somewhat nigher. For there have been very sizeable increases 01 industrial invesulent in recent years. Total investment in manufacturing is estimated to have risen Irom around pl,5 billion annually in 15t-5o to p2. billion in the past two years. A large part of this rise has undoubtedly been stimulated by the various incentives provided to new manufacturing investment under the "Promotion of Industrial Investment Law" enacted in 1959. fs of early 1964, about 250 firms had qualified for privileges under this law. It is estimated that total capital investment under these projects alone will exceed X%.0 billion when they are all completed. Nearly 5L.U billion of this is accounted for by two oil refineries, another 250 million by a chemical fertilizer plant (Government managed), 4200 million by the Firestone Tire factory, 500 million by a variety of textile plants, 300 million by cement, and Ks250 by metal industries. These investments have brought with them a significant amount of foreign capital and technical know how. 61. Iith the probable decline in the -rowth rate of agricultural exports, increasing reliance will have to be placed on domestic manufacturing as a prime impetus to overall growth. The prospects for further industrial - 18 - invptrpnt, nci fuirthe- freign artircintinn are godn There are still large possibilities for import substitution in a number of areas (textiles, PaPer, etal orkingtc.) and 2. smaI,er in ni n 7 1n ,nnhing ha , n be mad in industri al exports (cement and plywood etc.). Given these prospects, and the large i nns+nt made ret hc1h ,1 11ae Stl-l come i ^n+n fli p roc+to n, a continued growth in output of at around 10% a year would seem quite pi4 Kl- a+ east for the - nxt fiv, ya. Howeer-, t nsr +:+ +C t potential is realized on an efficient basis will require a major strengthen- ing of i;ndiJrect pul2ic support for idlustr-,, IIde.1 ~~4l -A ma~ ~e11 require substantially increasing the flo-, of public !can funds to the priv-ate mnanufaCturiLng secto I hroU appropriate^ inttuin suc asth IFC T. Other Setors and Overall Cutput 62. Among the remaining sectors, continued rapid expansion is likely in the public utilities, construction and transportation if the voluine of investment and output continues to expand at the rates indicated above. The contribution of public administration will also rise substantially if current government expenditure on developrrent grows at the rate indicated. Finally, the provision of housing service should Zrow moderately faster than population, while the trend of other services might be expected to rise at about the same rate as activity in all other sectors combined. 63. On the basis of these indications, total growth in real output shoula average about 5.5% annually over the next four to five years. However, with the decline in export prices expected, real income growth might be in the order of 5% as against the 6% growth rate of the rasb five tears. As compared ,ith 1963, export growth in the next 5 years might be close to 5% annually, but much less in relationship to the record 1964 level. (See Table 2.). The outlook after 1968 is obviously uncertain, but it is hard at present to see the possibility of export rowlh at more than 4% on the average. For total growth to groi more rapidly would require increasing einphasis on output for the domestic markety, particularly in manufacturing. - l8a - Table 2 Foreign Exchange Earrings Actual (nillion fctuals 7st. Projection 1957 1958 1963 1964 1968 idce 187 12 167 190 165 Rubber 82 64 91 95 95 Tin 26 12 36 50 50 Corn 4 9 ho 55 70 Kenaf 2 3 3 23 30 Tapioca 7 9 21 20 25 Teak & other wood 17 15 12 12 10 All other 63 46 79 100 .15 Total merchandise 390 308 463 560 590 Invisible receipts 10 12 36 4o 30 from other Govts. Other invisibles 26 28 54 60 80 Total current earnings 426 348 553 660 700 Private transfers (net)- 9 1 7 10 10 147 349 560 670 710 - 19 - V. Financing Development The Overall Pattern of Expenditure and Finance 61. To sustain a growth rate in real output of 5.5% or more will in 7% annually, in addition to expansion in public capital outlays on the 11 -a,- -JLLJ -. Aj . 1 1. at Miwu J.Mav D.L'wJt 'l j L .1- r'A . -" .JVtf of private investment from the real growth rate of over 8% recorded in the was due in significant measure to the industrial promotion incentives .D i shedU.~U Jin. ULJ vl'~. 1r; cJ1 L - .LcLL v.P.Lu 4L'U.Les~ cread U U) Ljy l;v roads and new export markets, and to the substantial rise in demand for I LULIr, CiL& .L U ILI±LLd U±± ~ j LIUaut-'U v' LIIUI-eiy.jLu r'IUUII VJ±.L I-'aL _L1klit. in the period. All these inducements to private investment should continue to operate in t uhe Nuure, buU some UeUeleratiou in the growtU rate woulu seem likely because of slower growth in export incomes, and because important vUOUUenecs -uW Uxie3 ke.g. Ln transpUrt, cUmmuiIcaUo.Ls ana uUUIILLEa- skills) which have to be dealt with by important further investment by L. the puLic secuor. o . An increase in private investment of this magnitude would bring total investment to nearly 24% of GNP by 1968, as against nearly 22% in l9oj=' . Tne increase in public outlays on development would mean That total public consumption would rise almost as fast as investment, even assuming only moderate growth in expenditures on defense and internal security. With appropriate fiscal and credit policies, it should be possible to increase moderately the contribution of national savings to domestic investment., This would require holding the growth in personal consumption to about 4.5/ annually - or just over 1% per capita. This is slightly lower than the real consumption growth rate apparently maintained over the past six years. However, if the overall growth rate of incomes does decline to the extent indicated, some slow down in consumption growth would be essential for adequate resources to be made available for invest- ment. At least a moderate increase in foreign capital inflow certainly seems possible and desirable, but it is unlikely that this can be on a scale which avoids the need for some increase in the national savings effort. A reasonable pattern of national expenditure by 1968 (compared with the actual pattern in 1963) might be something as follows: 1/ Adjusted to an internationally comparable basis, these percentages would be about 21/ in 1968 and 19% in 1963. - 20 - Table ] Gross National Exenditure: Actual in 1963 and a reasonable Prospect for 196J billion baitT Growth 1963 1968 Rates Gross domestic product 64.8 85.0 5.6 Factor income to abroad - - 0.6 - Gross national product 64.8 84.4 Loss from terms of trade - - 0.9 Real national product 64.a 83. 5.2 Current deficit 2.2 3.0 National expenditure 67.0 d6.4 T.T Investment-Fixed 12.5 17.6 7.0 Fublic 6.b77.6 Private 7.9 11.0 6.8 Increase in stocks 1.5 2.0 Consumption 52.8 66.5 5.0 Public .T TT. Private h6.6 58.1 b.5 National savings as % of GNP 18.6 20.2 Adjusted savinas rate '15.5) (17.0) Financing Public Sector Develonment A(. The dirpct nrntribution of the public qpntor to nationnl snvin.gs presently amounrts to about one-third of the total, which represents a signifinant nl nro the mirl-CO_ wThen it wn leqs than one-anartEr. To achieve the higher savings rate needed in the next several years, it will nrinh1hv ha Pc!qsnnHnl fnr +.he nnhili2r- o +.) mnnint.nin znmpth'in like4 its recent contribution. Given the expanded requirements for current develo-ment outlays, and the probable slo dor.n in grwth of tax revenus at current rates, this will by no means happen automatically. Hcwever, +the 7nve.rn'mc.n. e+.av.o an+. tn a nmnavatrvalv etronro fi nan,'l nirnei tiocn- and has time to make the adjustments required smoothly. The Central Government 67. The current surplus of the central government rose from $600 in 1963/64. This has been made possible oy a growth in current revenue ave raging 'A.0,S cannu0Aley sCe. L 15, )L0 as compared withL aU ris in currentLA LI.I ,3. expenditure averaging 7.5%. About one-third of the increase in revenues Ueri%res fromi ±ipot,~ LUU-Lt:;7 ct L/II Lt71jA V.LI L111 U APUU.1 :CVC_ LJJ_ L11 CLUt;) improved collections, and some higher rates. Another third comes from Wie business tax wALCI1o undel-wenU a majoy um1 u 7UV. Iinese owu tax sources together now account for over h'alf of total revenue, as against n e . - ', IY less than 4Up in 17>5(. Income tax receipts have gone up two and a nali tines but still represent less than 105 of the total. Export taxes have not gone up at all in the past seven years, and have declined from 254 to 15% of total revenue. .- 21 - 68. For the next several years, it is likely that revenue at past. As noted, the growth rate in real incomes is likely to slow down J_re1 -L --_ -/ , - /Ati -- -/w I - to around :p VUweenl 0 aa Lo>'Cu. As compared wirn -Lou, which has been an exceptionally good year, the growth rate is likely to be significantly less. Moreover, while important possibilities for improved tax administration still remain, it is unlikely that this factor can make the same relative contribution it has made in the past several years. In addition, it might well be economically justified to make at least a moderate reduction in export taxes on rice in this period to provide a greater incentive for production. On this basis, it would be surprising if the growth of current revenue did not slowdown to around 5% annually or even less between the banner year of 1963/64 (when revenues went up 12%) and 1968. 69. On the other hand, current government expenditures will probably go up at a rate of b.51' annually from the 1963 level, if current develop- ment outlays are to be increased at the rate indicated earlier. Even this would require holding down the growth in outlays in defense and general administration below the 7% growth rate of recent years. Interest on public debt held outside the Central Bank will probably double in the next several years if use of external loans and bond sales to the public and savings banks are to be increased as planned. On balance this would mean a reduction in the current surplus from about p2.3 billion in 1963/64 to about 91.2 billion by 1968 unless measures are taken to increase taxes. State Enterprises 7o Another important source of public sector savings is the surpluses of state enterprises. These have risen in the aggregate from around 9600 million in 1961/62 to 9800 million in 1963/64. (Earlier data are not avail- able.) The most imortantao these are the public power entities established several years ago, the railway, port and telephone organizations, the tobacco monopol the Government's teak monopoly and the lottery organiza- tion. There are also a large number of government manufacturing enterprises, but most of these have not made much contribution to financing their own investment. 71. Several of the state enterprises should show a substantial incrense in cash generation over the next four vears. particularly the Yanhee Electricity Authority and the Metropolitan Electricity Authority, qq the renut of increased earninos. Roth the State Railwv qnd the Port Authority should also be able to expand their current surpluses at lanzf mdrAtily a thn rp-iut of mny Pffinient onertions. n well qs increased activity. In the case of the manufacturing sector, the gvern- ment could reaizeaditional1 fuinds, eithenr b-, qnlp n f sonme of its- nrpqpnt enterprises, or by improving efficiency. In all, it would not seem excessively-t n-n+.is-+t- ton proiaect. a rise in thep torta.l t-mr-pnt. _qirn1n.- of state enterprises from around 9800 million in 1964 to 91,000 million by l1oAA current surpluses in recent years by an average of 9700 million annually. grants from the central government. As a result, the total resources - 22 - available to the state enterprises has exceeded their capital requirements by around 200 million annually in the past several years, and many of them have built up large cash balances. A large part of these balances is not subient to much central government control- While a reasonable degree of autonomy is clearly requ..red for efficient operations by these enternrises the degere of autonomy Pn-nv.H by many of them nrnhahly contributes significantly to an inefficient use of public funds. Efforts are eing made tn ines e the extint of ceItral government rntrol rnd it is assumed here that -overnment grants arid loans will be adjusted to equiAl the)i rgcin of fulndsz o; rqi- red Amfter- uee of, t.he, ;mrrupls ln foreign loans, wohich would iMply no further increase in these balances. Local Governments 73. Current revenues and expenditures of local governments have both L YI.L .-L.Y L11 ± Z ~ JVCLIDI JliILI_L CIO V;XU _L J W' I.L of a share in the business tax to these authorities. However, their current -L. iio0 I UI0.iU, aE U CLI vulu P.u., IIILL.L.LullCII U v~ L,i ku L_-X 'J. L 4: Uj .L outlays has been met by transfers and loans from the central goverrent, U -LuuuI1 CLVU _~JJ IUL . L 11 U L~e ~ Yt- ,CLO i. IIILL4_ a U%C ii L-.L t:a Lin the current surplus of local governments should be possible over the next severaL~ JI., L i UU UUUI-L U0.LJUt.LUII f0L 0CC1 taxes Ua~d someI leve-'.Eing044 in the very rapid growth of current expenditure which has taken place in re cent years, IoI indications have already been given in unapter iv of tne exten of foreign financing of public sector investment in the recent past and the possibilities for the next four years. An additional word may be added here about the status of foreign finaicing arrangements. The undisbursed portion of loans to the public sector now stands at about /1_0 billion, and it seems probable that the great part will be disbursed in the next four years. irrigation and power projects underway wiil absorb about 6000 million, the highways about Y700 million, and the railways Y200 million. New loan possibilities now under active consideration come to about /2.7 billion. These include the first stage of thelb Klongproject, the Nan project, power loans from the IBED and Germany, an IBRD education loan and a U.S government loan for highways. Vaguer possibilities for contract- ing additional loans in this period include additional irrigation and highway projects, additional financing for the railway, port projects, telephone expansion,, Bangkok drainage, and a second stage education project. This latter group might total over Y3 billion. If new loans approaching this magnitude are contracted in a timely fashior, disbursement on them might reach 03.8 or A.0 billion in the period,with tot,^l disbursements including those from loans already contracted, coming to 05.6 billion in the four years. This scale of foreign borrowing is considered reasonable on the expectation of continued efforts to speed up project preparation and to resolve the administrative difficulties which have slowed down project implementation and disbursements on existing loans. 75. Public sector amortization of existing loans reached Wb0O million in 1964, and will be at about 500 millim in'1968, Repayments on new loans contracted in the next four years could raise this total to g600 million by - 23 - 1968 even assuming that a much more moderate portion of this new debt will be on a rocdium term basis than was trin. of the laist fivo vars- 7A- (rant finnrina of develPment nrniets hq fqllpn in thp renrrPnt year to about Y450 million as against a peak of 700 million in 1963. The la tterreflected a Inrge imn in di eirsements on several highwy projects and the telecommunications project which had been in progress for q nnmber of years and w-re onmnleted in 1963 nor earl 1964 For the nert four years, it seems likely that grant disbursements for development new commitments which has recently taken place. 77. After allowing for all these financial possibilities, an important in Chapter IV. The main elements may be summarized below: Table b The Public Sector Financial Gap I U.L-L-L-Lul ucuLiLs Fiscal years (ctober-Septebe)-96'162193-96-16 1965U-68 Actuals Est. Forecast Central Government Current revcnue 7.h 8.1 8.3 9,8 11.7 43.5 Current Qxporditure 5.0 0.1 6.7 7.5 10 5 36. Current surplus 1.6 2.0 2.1 2.3 1.2 7.0 Surplus of state enterprises 0.6 0.7 0.7 0.8 1.0 3.6 Surplus of local governments 0.1 0.1 0.1 0.1 0.2 0.7 Total public sector savings 2.3 2.b 2.9 3.2 2.4 11.3 Foreign loan financing 0.5 0,9 1.0 1.0 1.8 5.6 Less: debt repayment -0.2 -0.2 -0.3 -0.4 -0.6 -2.0 Foreign grant financing 1/ 0.3 0.5 0.7 0.5 0.3 1.2 Total of above: 2.9 4.0 4.3 4.1 4.0 16.1 Public sector investment 2.9 3.7 4.4 4.7 6,6 22,7 Financing gap - -0.3 0.1 0.4 2.6 6.6 l/ Excludes grants for current expenditures (defense and police etc.) 78. It may be seen that the overall financing by the public sector was rret during the past several years almost entirely from the sources listed above. Bond sales to the savings bank and the general public fully covered or more than covered the moderate deficit of 1961-64 so that there was no resort to inflationary finance during this period. Indeed as already noted, there was a substantial deflationary impact from govern- ment finance in 1961 and 1962. Over the next four years, it should be possible to further increase government bond sales to the public. These reached $500 million in 1962/63 as against /360 million in 1960/61 and were probably even higher in 1963/64. A target of 700 million by 1968 and an average of /2.5 billion for 1965-68 would not seem .nreasonable. However, this would stilL leave a gap of nearly 52.0 billion in 19b and over Y4.0 billion for 1965-68 to be financed from use of bank credit and/or new taxation. Bank Credit, Exchange Reserves and New Taxes 79. Given the competing claims of the private sector for bank credit in the next four years, it is not at all clear that the government could borrow any substantial -mount from the banking system without either unduly restricting private sector growth or creating pressure on exchange reserves. However, with reserves of over $600 million at present, Thailand can certainly afford. some draw-down. Indeed, the government has allowed for a use of reserves of around $80-$100 million over the next four or five years. This still would leave a prudent safety margin at the end of the period, about 60% of the import level which might be expected by then. These resources could thus cover about half of the deficit assumed for 1965-68, ($2.0 billion out of h.1 billion). However, assuming that the reserve draw-down is to ston by 1969 or 1970. the annual gan to be covered from domestic sources would rise to 02.0 billion or more. 80. Whether any bank credit at all could be safely used by the govern- ment hevnd the anmonts offset by planner reserves ue wold prlend on ho- credit demands from the private sector develops and on the rate at which private time nd savzoti ns depstt exp-N z 1+. a nnd. IlTfanythrf.i Jnglk th reen Irroth in the latter continues, at least moderate amounts of credit to the public -tonr should, be poss. -ifkle~v w-tbout A J13 effe . U ir, ;+ 4o J 1n,~ m -m I ir that borrowing on a scale of $2.0 billion annually could be absorbed without .LL UJJ1 _..1JVLI LI ~ ~ ~.L u. L t;3,.L.i uv U 0 . 5± _.uCJ. UD~U ± ul L'QO J. Vuo. than now planned. 81. Therefore it would seem important to start working on new tax measures over the next several years designed to produce additional tax receipts of at least $1.0 billion by 1968 and perhaps Y1.5 billion or more by 1970. Such an increase would leave the central government's current surplus in 1968 the same as the $2.3 billion achieved in 1964, and would mean a moderate reduction in public sector savings as a percent of the national savings needed in that year. This might well prove to be inadequate if the hign rate of private savings reflected in the growth of time and savings deposits should decline. In that event, further tax increases would be required. A $1.0 billion tax increase would raise current central govern- ment revenues in 1968 to 15% of GNP as compared with just under 14% in 1963. These are certainly not high ratios in Thailand's present stage of development, so further increases would seem warranted if they prove necessary to support an adequate development effort. Financing Private Investment and the Over-all Monetary Balance 82. If private sector investment is to rise by 40% in the next five years 1963-68, a su'bstantial increase in financial support would be required. In the past several years, the private sector has made increasing use of both foreign financing and bank credit. Long-term foreign invest- ment reached 0350 million in 1963, as against much smaller amounts earlier. - 25 - Equally important has been the increase in medium-term foreign loans to the private U sector Oni a netU 'as-s, "-ese rose fro11 jIJLC\J iiil..L.Lu LIi .L7Jc y560 million in 1963 and the same rate in the first half of 1964. Unless thie average termI- Of th-eSe CrIedit.s is cons1ziderabUULY legtend it,- isull'Ly that the recent level of net inflows can be maintained, much less increased, - I -t -f . 1 --- -- --- Tht r'- L 1 ...f fl . IM-_ Wlnour AEe accurlulaiU0on 1 excessive uuuaL ueu o U111 iLUiue 1U JUU now stands at around $90 million, with annual repayments currently running at a rate of Ap2y million. Thus, for the future, iti would seem r buu to assume that net annual increases to such debt will drop to around 200 or p30o million, winfich would still bring total repayments up to arounu pouv million by 1968 if the average length of term was not increased, However, it would seem plausible to project a significant further rise in long-term foreign equity investment by 1968, so that the total net inflow from these sources might be about the same as in 1963, 83. This would still leave a major role to be played by domestic financial institutions. As noted, in the past several years bank credit to the private sector has been expanding at an average rate of around 15,0 annually. A continued rise of something close to this rate would seem needed if private sector investment is to expand adequately. This would mean an increase in the absolute e:rpansion from around $1.1 billion in 1963 to twice that in 1968. Together with the foreign financing projected, this would cover about 23% of the gross private investment projected for that year, as against 21/ in 1963 from these sources. However, the question remains as to whether the banking system could safely supply this magnitude of funds. An annual growth of the money supply at around 6/ would seem the most that could be permitted in this period without undue monetary pressureo This would in itself permit credit expansion of X0.9 billion annually by 1968. Expansion of quasi-money and the capital accounts of the banks has been growing very rapidly in the past three years -- averaging about 01.7 billion annually. If this rate could be maintained there should be sufficient funds to meet both the suggested private sector requirements and still permit some credit expansion to the public sector. However, some reduction in the recent high growth rate may well take place in the next several years (in- deed expansion in the first half of 1964 had fallen to a rate of $1.4 billion despite the boom conditions of that period). Thus it seems quite possible that the annual increments of funds available to the banking system may be just barely adequate to meet the needs of the private sector, so that the marginal requirements of the public sector would have to be met by increased taxes. External Finance 8he Even if the high level of exports achieved in 1964 can be main.- tained and increased moderately as indicated earlier, Thailand will continue to need substantial capital inflow in order to finance an adequate increase in imports over the next several years. Total loans and grants to the rublic sector averaged about $90 million in the calendar years 1962-64. (These exceeded the flows indicated in Table 4 by around $15 million partly because the latter is on a fiscal year basis, but mainly because they exclude grants used for defense. police and public administration. For the next four years total grant receipts are not likely to exceed $20-$25 million annually, while loan disbursements to the Dublic sector miaht average about $60 million - 26 - in the next two years, and then perhaps rise to $90 million by 198. Gross inf*Low to the private sector might reach $80 million by then ($30 million equity and $50 million loans) as against a 60 million average in the past two years. However, with rising debt service, the net inflow would go up much less. Indeed, on the basis of the assumptions made here, net capital inflow before use of reserves would remain at just about the same amount in 1968 as the average for 1962-64 -- that is, around $130 million. However, the increment to resources available for import financing would be substantially augmented, if as seems likely, there is a shift frcm large annual accumulations of reserves in the past several years, to a moderate draw-down in the next several. This would permit a growth in imports of around 5% annually between 1963 and 1968, Table 5 Actual & Projected Finanicine of Imnorts (millio US$) Actuals Estimated Projected 1962 1963 1964 1968 Imports of goods & services 587 653 710 820 Exnorts of goods & services 17 559 670 710 Balance of above - -9 _7 - 110 Dividnd nyments - A - A - A - 15 Interest on debt - 9 - 9 - 12 25 Baanc on curn acot I 109 'ar. Foreign grants 1/ 39 48 30 20 Privtr+t -n-i+r c-i+a*' 7 1'7 Loans to private sector (gross) 23 44 50 50 Errors & omissions 17 25 15 10 Repayments of private sector - 12 - 16 - 25 - 40 Net inflow from abroad -127 1711 130 use of reserves -U4.1 -145 -2 Balance on capital amount * 109 y ±nc±uaes a sign1Izoanl amnounor cgrant aisoursements for aefense, po±lce and public administration which is excluded from the grant data in Table 14 3/ These flows differ, moderately from those shown in Table 4 mainly because the latter is on a fiscal year basis. - 27 - 85. Import growth at this rate should be adequate to provide the exanio i LLPI supplies ofIraw materi,a_>ls c.. andL_ t--~'3Vo1U.U-L Q_Cu over-all growth in cutput by 5.%1 annually and of investment at around 7% annually. Some Lurther possibilities reImIain for imporU ubstiUution LUL foodstuffs (e.g. fish products, sugar, coffee, etc.) which should permit this category of imports to remain comparatively stable as it has for the past five years. Amrong the major raw material and semi-processed imports, there are sgnificant possibilities for greater import substitution of cotton, fertilizer and petroleum products (through domestic refining). Among manufacture of goods, the recent investment in textiles, automobile tires and metal processing will help to keep the growth of imports down, wx%ith these prospects, there should be adequate scope within the overall limit to permit imports of capital goods to rise by 7% or 8% annually which would be necessary to achieve the overall growth of investment assumed. 86 The problem of financing adequate import growth after 198 may well be more difficult, for use of reserves cannot continue indefinitely, and prospects for export growth after that are quite uncertain. Present longer-run indications of production and market prospects suggest that the country may do well to sustain a Lto growth in export earnings in the 1970ts even given a considerable expansion in new agricultural exports which are at present exported in small quantities. With this sort of growth in exports, an expansion of imports at even W' annually would require progress- ively larger net inflows of foreign capital in the coming decade. A projec- tion on the basis of these assumptions indicates that the net inflow before payment of interest and dividends would have to rise from the $110 million assumed here for 1968 to nearly $2CO million by 1978. If most of this increase were to be met by loans on conventional terms (long-term to the public sector and medium-term to the private), gross inflows would have to rise from the $2CO million projected for 1968 to over $400 million for 1978 in order to cover increased debt service. The latter would go up from $95 million (13% of exports) in 1968 to $240 million or 20% of the exports assumed for 1978a As a practical matter, it is considered unlikely that Thailand could obtain gross capital inflow of this magnitude. Obviously the problem would be still greater if exports growth were less than b% or if reQuired imorts were more than that. One answer to this oroblem would be for Thailand to secure more favorable financing term than assumed here to permit the required net inflow with lower gross totals. 87. However, it would be premature to conclude that Thailand will in fact face an external financing Droblem of this manitnd_ Fr- one thing new exports might develop faster than projected. For another, it may not indicated. As indicated earlier, important improvements have been made duiring -rece-nt yerso 'in deeom n polics ndr in -]a-nrnnnAn andl implementation of projects. However, substantial further improvements T.Tl 1 k 1 n0 r. r nA + n .n, TO+la cn"v+ ,f P --aia ~r, 1nr ew earlier on a reasonably efficient basis. If these cannot be achieved, the eonomic Goomy ate Wuld onae f o eig, but so would therity of the economy to utiLlize increased foreign capital effectively. During tDhe - 28 - next two or three years, it should be possible to judge much better what the lo r h wijth rse to n exprt.RP. ani to the ability of the economy to increase investment and to make effective use of forein -ca pia i r-s- p e +o +i It++te twn ma-r tes-ts will be the rate at which projects are prepared in a manner suitable for externaL financing, , an~te +at at whi-ch existing project- are iperetd STATISTICAL ANNEX Table I External Public Debt Outstanding. II Estimated Contractual Service payments on external Public Debt. III External Private Debt Outstanding. IV Estimated Contractual Payments on External Private Debt. V Industrial Distribution of Employment in Census Years. VT Industrial Origion of Gross National Product at current market prices., VII Industrial Origion of Gross Domestic Product at 1962 constant market nrices, VIII Prodnction of Principal crops and Forestry nrnducts TX Tndicators- of Mining, Manufacturing and Electricity Output. X Value of Exports by Principal Commodities. XI Value of "Other Domestic Exports". XII Value of exports by principal commodities at constant v!6 pvric*e/. XVTI Central Government epenure lacual) (Continued on following page) I-L 4..L~ UVUJ. UIIKLAU ViUL. LI U IW-.PU t-i-LVLV~ U11 I oVJLILIILJ.. Social Services. XXI Financing of Central Government Overall Deficit. XXII Total Public Sector Capital Formation. XXIII State Enterprises' Capital Formation. XXIV Local Governments' Capital Formation, so EOt cVailable - N1l or insignificz7nt Table 1: THAILAND - EXTERNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF JUNE 30, 1964 WITH MAJOR REPORTED ADDITIONS JULY 1 - OCTOBER 28, 1?64 Debt Repayable in Foreign Currencies (In thousands of U.S. dollar equivalents) Debt outstanding Major reported Item June 30, 1964 additions .em Net of Including July 1 - undisbursed undisbursed October 28,1964 TnTAT EY TAT rmTTn niMr1 177 1.17 InO 97A 0 rn Privately-placed debt /1 (S2,266 /2 76,h -8 IBRD loans 90,767 141,B65 - U.S. Government loans 19,386 49 55 0 - Export-Import Bank 9,53 - AID 201 11,100 - Loans from West Germany 4,998 34,879 900 /1 Of which $296,000 is guaranteed by Thailand as to foreign exchange transfer only. /2 Disbursed figures for privately-placed debt are derived from balance of payments data. Statistics Division IBRD-Economic Denartment November 13, 1964 m_r ~ ~ ~ ~ ~ ~ ~ ~ ~ V T A_ mT T am fM IA T1f/1WnA"tIAT CIITrrTT4V nAVUMTMC MyT L*YrrtDAT AT vTmT (IP 7 O il Table 2: H11AlAND - ElSTIAT1ED LCOINTI l'tuA r ly.Lo oazninVa un '4Ea.UAnW%.Lu& TP W. vuW- STANDING INCLUDING UNDISBURSED AS OF JUNE 30, 1964 WITH MAJOR REPORTED awar-a-n aTe' ru ar -7 1 e 1mn n ) i nZ 1a . /i ADIOUIUS JIULL l - LA.;IUDfi L U .L7UL4 / Debh+ Dr1nle i n C1-1nrnrennCie (In thousands of U.S. dollar equivalents) FRAAD fT DEFi'T CUIJTSTI 1PEGIN f4F PER I F ) PAY?FNT'Ij DUIjN PERIcD INCIjDING AWC(! T I- YEAR UND I' URSEC ZATION INTE%RST TiTAL 1964 297,6282 18,253 7,457 25,710 L1965 2087,703 20,342 8,940 29,288 1966 267,361 22,780 9,873 32,653 -.Iuoi /-4+4.,J5SL 23,812 10,18731'9 1968 220,769 26,361 10,253 36?614 1969 i1,409 22,956 9,658 jz2IbL4 1970 171,453 17,351 8,796 26,147 L97 154f,1L 15,406 7,877 23,255 1972 138,695 12,539 7,114 19,653 1973 126,157 12,897 6,436 19,333 1974 113,259 12,123 5,754 17,877 1975 101,136 12,520 5,098 17,617 1976 88,616 11,436 4,432 15,868 19// 77,180 11,312 3,835 15,147 1978 65,868 11,137 3,238 14,375 PUBLICLY--ISSUEr BCCS /3 DE-3r GUTST (PEGIN CfC PERILJ) PAYMENITS OURINC PtRlJ2 INCL(,INC MCRTI- YEAR LINCISBURSEC ZATION INTEREST TGIAL 1964 - /2 '78 9 396 Table 2: THAILAND - ESTIMATED CONTRACTUAL SERVICE PAYMENTS ON EXTERNAL PUBLIC DEWl' OUT- STANDING INCIUDING UNDISBURSED AS OF JUNE 30, 1964 WITH MAJOR REPORTZD ADDITIONS JULY 1 - OCTOBER 28, 1964 /1 (coNT.) Debt Repayable in Foreign Currencies %.\n WLUsnSLLO A.L . 0Je L%IJ.L A.c& %UWy LY.L LAUna PAGE2 PRIVATELY-PLACED DEBT DEBT CUTST (PEGIN EF PERIC01 PAYMENTS DhRING P"PI:n INCLU"'ING AMORTI- YEAR UKCISRURSFC 7ATTnK I NT-PFCT TniTAI 1964 76,584/2 11,337 872 12,209 1965 69,859 12,399 893 13,291 1966 57,460 14,307 797 15,104 1967 43,154 14,444 688 15,132 1968 28,709 14,331 569 14,900 1969 11,378 9,002 432 9,434 1970 5,376 2,766 280 3,047 1971 2,610 2,292 102 2,394 1972 317 79 17 96 1973 238 79 13 92 1974 159 79 8 87 1975 79 79 3 83 18RC DEBT CUTST (EGIN LF PER0UJ) PAYME'NT UUR'vf FErA L INCLUCING AMCRTI- YEAR UNUISBURSE ZATlUN INTIEREST TUAL 1964 139,365/2 5,38C 5,253 10,633 1965 136,44S 69207 6,058 eev 1966 130,242 6,490 6,425 12,915 1967 123,752 6,9C 6,399 12,689 1968 117,462 7,342 6,359 13,7J1 1969 11ClzC 8,036 6,035 14,C7i 1970 t02,084 8,460 5,613 14,073 1971 93,623 6,331 5,183 12,C15 1972 86,792 6,C69 4,827 1C,896 1973 80,723 6,9418 4,478 1C,896 1974 74,305 6,790 4,110 10,900 1975 67,515 7,177 3,721 10,891 1976 60,338 7,588 3,309 10,897 1977 52,751 8,045 2,873 10,918 1978 44,706 7,859 2,42C 10,279 Table 2: THAILAND - ESTIMATED CONTRACTUAL SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUT- STANDING INCLUDING UNDISBURSED AS OF JUNE 30, 1964 WITH MAJOR REPORTED ADDITIONS JULY 1 - OCTOBER 28, 1964 /1 (cONT.) Debt Repayable in Foreign Currencies (In thousands of U.S. dollar equivalents) PAGE 3 U.S. CCVERNMENT LOANS DEBT CUTST (BEGIN CF PERIO,) PAYMENTS DURING PERIGD INCLUCING AMCRTI- YEAR UNCISBURSEC ZATICN INTEREST TCTAL 1964 49.550/2 1,158 1,186 2,344 1965 49,Z66 1,736 1,416 3,152 1966 47,53C 1.736 1,630 3,366 1967 45,794 L,C53 1,837 3,891 1968 43,741 2,655 2,027 4.682 1969 41,085 3,408 1,981 5,389 1970 37.678 3.565 1.805 5.371 1971 34,112 3,574 1,612 5,186 1972 3C.53P 3.584 1.418 5.002 1973 26,954 3,594 1,223 4,817 1974 24.,46 2.447 1.n4l 3i492 1975 20,913 2,458 914 3,371 197A 1I,4A 1I635 794 2,42Q 1977 16,32C 1,646 710 2,356 1978 15,174 62658 222 cVorDT tMofD1oT DANilv L n r r t-F I" U 0A I V F i'N DT CII VC T ULIL I UUl.I (eEGIN CF PERICD) PAYMENTS DURING PvRIrJ[D TmI IInlTM AMCA DTT rr u r 1 _ JTI-P . 11 r l YEAR UNDISBURSEC ZATION INTEREST TCTAL I el 1 . rn - /A I. 10It j 0, '4 jU/~ 1) 15 1,171 29,328 1965 38,166 1,736 1,340 3,C76 1966 36,43C 1,736 1,493 3,23C 1967 34,694 2,C53 1,641 3,694 a 32,641 2,655 i,770 4,425 1969 29,985 3,257 1,664 4,921 1970 26,728 3,257 1,479 4,736 1971 23,471 3,257 1,295 4,552 1972 20,214 3,251 1,110 4,367 1973 16,957 3,257 926 4,183 1974 13,70C 2,100 758 21858 1975 11,600 2,10C 637 2,737 1976 9,5CC 1,267 528 1,795 1977 8,233 1,267 455 1,722 1978 6,967 1,267 382 1,649 Tble 2: InAIIAdN - STIUL-ED CONTRACTUAL SERVICE PAYMENTS ON EATERNAL PUBLIC DEBT OUT- STANDING INCLUDING UNDISBURSED AS OF JUNE 30, 1964 WITH MAJOR REPORTED AD'r*m-01 1-a eJUi *. LAsmUwarmL rtO ma I/4 . I-- O T.I 1 n I-L n- 1,1- 1- ~--. vuut acpycya.l Iu rurlIn ourunclIes (In thousands of U.S. dollar equivalents) P A ke j rE . US CLVI. LL'ANS - AU DE Ff CU TS T (fEGIT CF PERICI)) PAYMENTS DURINC PERIOD INILUUING AMLRTI- YEAR UNCISBURSEC ZATICN INTERcST TOTAL 1964 11,10c/2 C 15 15 1965 11,1C C 76 76 1966 11,10C C 136 136 1967 11,LOC C 197 1-7 168 11,10C C 257 257 196) 11,1CC 151 318 469 1970 10,949 308 326 634! 1971 10,641 317 317 634 1972 10,324 327 307 634 1973 9,997 337 237 634 1974 9,66C 347 287 634 1975 9,313 358 277 634 1976 8,955 368 26o 634 1977 8,587 380 25i 634 1978 8,207 391 243 634 LCANS FRO> CTHEP GOVTS. DEBT CUTST (BEGIN CF PERICO) PAYMENTS DURING PERIUD INLLUDING AMLRTI- YEAR UNDTSBURSEC Z TION INTEREST CTAL 1964 32,129/2 0 139 139 1965 32,129 C 580 580 1966 32,129 247 1,021 1,268 1967 31,882 1,024 1,262 2,286 1968 30,858 2,032 1,298 3,330 1969 28,826 2,510 1,210 3,720 1970 26,316 2,560 1,098 3,657 1971 23.756 2,708 980 3,688 1972 21,048 2,807 852 3,659 1973 18.242 2.807 722 3.528 1974 15,435 2,807 591 3,397 1975 12.62q 2.80 460 3.266 1976 9,823 2,214 329 2,543 1977 7.609 1621 2S2 1.873 1978 5,988 1,621 192 1,813 Table 2: THAILAND - ESTIMATED CONTRACTUAL SERVICE PAYMENTS ON EXTERHAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF JUNE 30, 1964 WITH MAJOR REPORTED ADDITIONS JULY 1 - OCTOBER 28, 1964 /l (CONT.) PAGE 5 f1 Includes service on all debt listed on Table 1 except the following: DM 36,000,000 from West Germany $ 2,500,000 IBRD loan to Industrial Finance Corp., DM 11,000,000 loan to Industrial Finance Corp., from Kreditanstalt fur Wiederaufbau. /2 Debt outstanding is as of June 30, 1964, payments are for entire year. /3 Publicly-issued bonds repaid in first half 1964. Statistics Division IBRD-Economic Department November 13. 1964. Table III:THAILAND - EXTERNAL PRIVATE DEBT OUTSTANDlIG INCLUDING UNDISBURSED AS OF JUNE 30, 1964 Debt Repayable in Foreign Currencies (In thousands of U.S. dollar equivalents) Debt outstanding Jin *0 19Ah Item Net of Including undishispnrd undisbursed TOTAL EXTERNAL PRIVATE DEBT 67.561 90.426 -L%:;..L ~ U 9J L Loans from parent companies to local Unspecified 57,504 75,989 U.S. Government loans - Eport-Import Bank 6,842 4,842 Statistics Division IBRD-Economic Department October 11, 1964 Table IV: THAIIlD - ESTIMATED CONTPACTUAL SEPVICE PAYMENTS ON EXTERNAL PRIVATE DEBT OUTSTANDING INCLUDING UNDISBURSED Ic fý' TT' lvrr 'Ir -i n concentrates. -_ource: Annual Statement of Foreign Trade and information supplied by Bank of Thailand. Table XIV Value of Imports (c,if.) by Principal Category (liillions of baht) 1952 1955 1957 1958 1959 1960 1961 1962 1963 -. Food and Tobacco 829 820 897 9?8 983 892 962 902 Products of which: - milk products 164 294 380 379 407 412 410 454 520 - tobacco 77 134 183 181 156 95 181 126 121 2. Crudc 82 76 74 73 71 14,3 2C 205 225 3. hineral Fuels and Lubricants 420 6 92 928 901 2_4 102 10Z 1224 1225 of w^hich: - gasoline 154 259 353 340 358 371 345 340 320 -4 fuel & diesel oi s10 22 3 3 342 372 41 545 4. AniLal & Vegetable ils & Fats 1 2 31 0 1~ 5. Chemicals of wfhich: 296 581 754 757 922 9'3 1045 11L90 L240 - medicinal & pharmac. 109 213 268 266 316 320 353 356 326 - fertilizers 3 29 62 45 73 70 71 85 125 6. IManufactured Goods of which: ý2692 .3677 3640 3434. 3603 3812 42 57 4438 4708 - paper, paperboard 57 158 292 213 228 265 305 305 334 - textiles, clothing & footwear 1078 1230 1158 1181 1306 1242 1616 1558 1446 - iron and steel products 268 407 611 707 712 646 80 '?8 0 - simple metal m-fg. 230 304 370 327 300 373 39 ý6 62 7. Non-'lectrical Ichry. & Eciuirnt. 345 444 632 744: 1095 102.0 1060 1384 -1500 8. Electrical L-chry. & Equipmt. 152 342 392 380 40o 505 517 94222 5. Transp,ort Eauipment of which: 529 597 885 737 7c6 866 88 1097 L336 - autos,motorcycles, bicycles etc. 176 221 250 193 227 356 249 334 499 - bus.'es, trucks, lorries, chassis 189 240 383 392 392 408 467 571 671 10. Iiiscellancous Transactions of which: 6 2_46 318 20 232 367 336 372 3j7 - gold bullion 31 213 106 22 - 62 127 159 11. Total 5421 7503 8539 8237 8989 9622 10287 11504 12486 Adjustment for balance of payts. 230 -j57 - 172 - 183 - 42 - 184 - 225 - 263 - 255 Nerchandise imports, c.i.f. 5651 6928 8367 8054 8947 9438 10062 11241 12231 ource: Annual Statements of the Foreign Trade of Thailand and Bank of Thailand. Table XV iantipyof Selected Imports (Thousand metric tons, except uhere otherwise indicated) ;122 ;1955 .1956 195? 1958 19. 1960 1961 1962 1963 Food and Tobacco Wheat flour 13.0 23.7 26.5 29.6 26.4 25.4 23.6 25.8 26.5 25. ,ugar 17.6 38.3 12.5 8.0 17.1 9.1 0.01 0.02 - - Coffee 2.3 2.7 3.4 3.5 3.4 4.5 5,7 5.0 5.4 2.7 Tea 1.2 1.4 1.4 1.6 1.5 1.5 1.5 1.5 1.6 1.3 To--c unnanufactur2.3 . .9 . Tobacco manufactured 0.3 0.06 0.02 0.04 0.02 0.02 0.02 0.03 0.04 0.03 Petroleum, Products Gasoline&benzine 1/ 209.3 341.32/ 381,7 458.6 454.5 499.0 560.3 610.0 561.6 544.0 Kerosene 1/ 94.5 99.1 118.9 106.9 120.4 130.6 165.9 129.5 143.1 146.4 Fuel and diesel oils 1/ 194.2 404.22/ 472.8 527.7 5?0.1 617.0 658.5 770.4 1,613.9 1,183.2 Lubricants 1/ 19.5 28.4 30.1 36.8 28.7 33.6 40.8 36.3 56.2 52.8 Rubber Products Tires and tubes 3/ 0.7 1.9 2.1 2.7 3.3 2.5 3.2 3.1 4.2 3.3 Paper and Paier Products igarette paper 0.7 0.4 0.2 0.3 0.7 0.3 0.5 0.5 0.5 0.3 Newspaper 3.4 17.2 13.7 16.6 15.2 18.8 17.8 24.5 15.5 26.6 Printing & writing paper 4.7 4.2 6.8 11.1 10.1 12.6 13.8 16.0 15.3 17.5 Paperboard 6.6 6.8 7.7 6.5 6.8 7.5 9.3 10.9 14.6 18.1 Yarns and Thread 0otton 4.2 3.4 5.1 4.7 4.6 6.9 4.4 4.4 4.2 4.7 Rayon, silk, nylon etc. 0.3 0.7 0.7 0.7 0.9 0.8 0.08 0.1 1.6 2.2 Wool 0.02 0.03 0.06 Cl.1 0.03 0.04 0.04 0.04 0.04 0.06 Yard Goods Cotton 3/ 3.7 5.4 6.7 0, 141.1' 64. 6 148.0 169. '239.0 122.6 Silk, rayon, nylon etc. ./ 3.6 3.5 4.0 3.6 .. 30.8 47.3 29.4 28.2 40.7 64.8 Wool 4/ 0.2 0.3 0.2 0.2 .. 0.6 1.0 1.6 1.3 1.1 0.6 Linen 4! 0.2 0.3 0.3 0.2 .. 0.4 0.4 0.6 2.7 3.8 3.7 Textile ianufactures Laces, ribbon etc. 0.04 0.06 0.07 0.05 0.1 0.1 0.04 0.02 0.2 0.2 3. , 1L 55.cý I( ?. 2.7 3.3 2." . 3.6 3. f Household linens 0.6 0.7 0.9 0,9 0.9 0.) 0.9 1.1 0.9 0.5 (Sne footnotes' on next page) Table XV' (Continued) 1952 1.955 1956 1957 1958 15 1960 1b1 1962 196 Miscellaneous Raw Materials Rope, twine, cord 2.3 2.9 3.8 4.1 4.7 4.9 5.7 6.6 6.4 6.2 Gunny bag j/ 23.6 25.1 16.5 29.2 17.7 19.8 21.1 25.3 30.8 - Cement 42.7 59.3 25.9 48.5 22.0 15.9 14.1 6.1 34.9 16.5 Iron & Steel (included tinplate) Joists, girders, angles etc. 34.0 53.9 50.8 59.11 69.2 63.6 75.4 34,9 117.9 132.7 Plates & sheets, coated 42.0 59.1 63.1 62.8 67.2 69.1 57.6 40.1 15.9 14.4 Rai1way r,ails & accessories 9.3 14.5 37.5 5.8 37.5 31.4 20.6 0.06 0.6 0.8 Tubes, pipes & fittings 5.1 8.8 13.3 10.2 12.1 15.5 15.8 25.6 30.5 34.5 Plates & sheets uncoated n.a. n.a. 3.? 11.9 12.0 16.7 29.7 70.9 78.4 101.0 Non-ferrous Metals Copper & alloys 0.7 0.8 1.1 1..6 1.2 -L.1 1.4 1.2 2.1 2.4 Aluminum & alloys 1.4. 2.0 1.9 2..4 1.8 1.5 3.1 2.7 4.0 4.8 Lead & alloys 0.5 0.5 0.3 0.,6 0.6 1.1 0.8 0.7 1.1 0.8 Zinc & alloys 0.8 0.8 1.4 1.3 1.7 1.5 4.0 7.3 9.0 10.9 1/ 1000 kiloliters. 2/ Partly estimated. 3/ 1952-1957: million units; 1958-1963: million sq. yards. ] 1952-1957: thousand tons; 1955-1963: million sq. yards. /ue Anillion udnits. Source AnulSaeet-o h oeg rde of 7hail.and and Departmenit of lustomrs. Table XVI Balance of Pameits (Million of U.S. dollars> n -June 1957 1958 1959 1960 1961 1962 1961 1963 1964 1.0 Goods and Services l.1 Receipts 428.2 350.1 3 .459.1 543.3 138.8 552 287.9 350.9 Merchandise exports,f.o.b.390.-1 307.0 357.4 405.0 473.3 453.9 460.5 240.5 296.1 Non-monetary gold - - - - - Transportation- & In-SUrne . 1e. 5. 9. -25 14.2 X4.477. Foreign travel 2,7 4.2 5.2 5.4 7.7 8.8 9.9 5.1 5.0 Investment Income 5.7 6.0 4.9 6.6 8.9 10.3 12.7 6.3 10.5 Direct Investment .. .. .. (0.2) (0.1) (0.3) (c.6) (0.4) (0.4) Other .. .. .. (6.4) (8.8) (10.0) (12.1) (5.9) (10.1) Government n.i.e. 10.4 12.0 13.2 17.2 21.4 30.9 35.2 15.3 19.4 of which non-militaryl/ .. .. .. (16.4) (18.7) (22.0) (20.1) (10.3) (9.9) Other services 9.0 8.4 8.3 10.5 12.6 1.6 15.8 8.2 6.7 Sub-total: Services 36.3 40.9 37.5 49.2 ¯63.1 77.8 88.0 42.6 50.5 Sub-total:GOods & Services426.4 34?.9 394.9 454.2 536.4 531.7 548.5 283.1 346.6 Private donations 1.8 2.2 5.0 4.9 6.9 7.1 9.4 4.8 4.3 1.2 Expenditures 473.8 430.1 466.8 496.6 536.0 603.6 668.1 316.8 366.1 Merchandise iports,c.i.f. 404.7 385.5 424.4 447.4 479.9 540.7 9U3.2 285.0 329.,3 Non-monetary gold 5.1 1.1 2.9 6.2 7.5 7.1 3.6 0.6 Transportation & Insurance 8.8 6.2 5.4 5.7 6.6 5.5. 4.0 2.5 2,.4 Foreign travel 12.7 10.2 10.0 12.7 12.2 16.2 17.1 8.1 10.9 Investment Income 17.5 13.2 11.4 11.3 13.0 15.0 14.7 7.5 9.9 Direet Investment .. .. (8.1) (9.1) (9.4) (8.4) (4.6) (4.2) Other .. .. .. (3.2) (3.9) (5.6) (6.3) (2.9) (5,7) Government n.i.e. 4.6 2.9 3.9 5.3 5.0 4.4 7.4 2.3 4.6 Other services 9.3 7. 9.8 8.9 10.9 12.3 12.2 6.? 6.9 Sub-total: Services 2/ 52.9 _40.0 40.5 43.9 47.7 53.L _ 5._4 30.7 35..3 Sub-total:Goods & Services 462.7 426.6 464.9 494.2 533.8 601.6 665.7 315.7 364.6 Private donations 11.1 .3.5 1.9 2.4 2.2 2.0 2.4 1.1 1.5 (For foetnotes see end of table) Table XVI (Continued) Balance of Payments (Millions of U.S. dollars) Jan. - June 1957 198 1959 ;L960 1961 1962 1963 1963 1964 1.3 Net Goods & Services -45.6 -80.0 -.66.9 -37.5 7.3 -64.8 -1102 ~ 28.9 -15.2 2.0 Errors and Omissions - 5.0 _2- 10.9 . 29.2 9.6 16.4 28.8 16.3 0.8 3.0 Capital and Official Donations 3.1 Private Capital / .0 .0 .10.0 9.3 14.6 19.0 40.8 19.2 26.9 3.2 Drawings .. .. ,130 26.04- 35.4 ~2.3 28.1 42.7 Direct long-term 2.4 4_/ 3.3 4/ 3. 4/ 3.4 T.5 9~ 17.8 11.6 7.9 Loans to enterprises .. . 4.6 1.6 4.0 6.9 8.2 2.0 1.7 Suppliers' Credits .. .. .. - - - 14·.4 4,5 8.8 Deferred payments 5/ .. .. .. 3.7 7.0 16.2 21.0 7.8 20.9 Trade credits and advance payments for imports .. .. .. 4.3 8.5 2.7 5.2 2.2 3.4 3.3 Repayments .. .. .. 3.7 11.4 16.4, 21.5 8.9 15.8 Direct long-term .-. .. 0.5 0.8 2.1 0.8 0.5 0.4 Loans to enterprises .. .. .. 1.7 2.2 4.8 3.1 0.5 2.5 Deferred payments .. .. .. - 3.3 7.1 12.7 5.6 10.,2 Trade credits and advance paynents for imports .. .. .. 1.5 5.1 2.4 6.3 2.3 2.7 3.4 Official donations (net) 3.0 25.3 41.3 34.1 21.4 38.8 47.6 30.2 14,0 U.S. grants 31.4 20.7 37.5 32.0 19.4 26.8 30.6 21.1 9.5 Colormbo Plan, UN Special. Agencies, etc. 0,6 1.6 0.8 2.1 2.0 12.0 14.2 6.3 1.7 Japanese war debt Settle- ment 3.0 3.0 3.0 - - - 2.8 2.8 2.8 (For footnotes see end of table) Table XVI (Conined Balance of PaYMents (Millions of U.S. dollars) 1957 1958 1959 1960 1961 1962 1963 1963 196 3,.5 Official Loans 19.7 10.8 10.6 13.9 26.7 52.2 36.3 16.5 11.9 3.6 Drawiigs 28.5 14-Z 23'7' 28.3 41.4 64.7 51.8 24.7 25 5 IBRD 8.2 5.1 12.2 11.2 12.4 16.7 11.5 5.7 7.2 ICA/AID 6.0 0.6 1.9 4.0 7.3 1.7 0.6 1.2 DLF - - - 5.4 5.8 2.9 3.0 1.4 1.9 Export-Import Bank 0.3 - 6.6 5.4 1.7 7.5 2.4 1.5 0.1 Bank of America 3.0 - - Germany - - - - - 0.8 0.4 4.3 Suppliers' Credits 11.0 9.2 3.C 2.2 1.4 5.8 7.8 12.1 5.1 Deferred payments 5/ - - - 0.1 5.0 2.4 9.2 3.6 3.9 Project Contractors' Credits- - - - 7.8 27.7 16.5 - 1.8 3.7 Repaynents 6.1 3.9 _13.1 14.? 12.1 15.5 8.2 13.6 IBRD 1,4 1.5 2.5 2.6 2.7 2.8 3_9 15 2.4 ICA/AID - - - - 0.2 0.2 0.1 0.1 DLF - - - - - 0.1 0.1 0.1 0.1 Export-Import Bank 0.1 0.1 0.1 - 0.11 1.2 1.3 1.2 0.6 Bank of America - 0.4 2.8 3.8 2.0 2.0 2.0 2.0 - Suppliers' Credits 4.6 2.1 7.7 8.0 6.9 4.1 2.6 2.2 2.0 Deferred payments 5/ - - - - 3.0 .1.7 5.4 1.1 6.2 Project contractors' credits- - - - - - - 2.2 4.0 Miscellaneous (net) 0.6 -1.0 0.3 - 7.8 6/ - 1.2 - 0.2 1.3 -0.1 -1.2 5.0 Foreign Assets, Net(-increase)-7.7 19.4 -_6.2 -41.2 -78.4 -61.8 -44.6 -53.2 -39.6 1/ Operating expenses of embassies, consulates and international organizations. 2/ Excluding Non-Monetary Gold. / Before 1959, estimated; from 1959, based on exchange records. Excludes banks. 4j Net. 5/ The credit entry represents the value of goods imported on a deferred payment basis. The debit entry renresents repayments, 6/ Of which: Baht liabilities to US Government for surplus agricultural commodities: 1.8, and payments to IBRD and IDA: 4.2 Source: D4F and Bank of Thailand. T able XVII Changes in Factor- A Splynnr (Billions of Baht) June 1964 1957 1958 1959 1960 1961 19622/ 1963 Change Total Public Sector Outstanding Govt. borrowing from Central Bank .39 .37 .38 -2. 25L/ -.55 -.o4 -1.03 Govt. borrowing from other banks .07 .05 .16 .28 -38 .84 93 .. 1.0 Total borrowing ¯- ¯ .54 *.9 ~ .10 ~.4. 4.7 Less: Govt. deposits in Central Bank -.04 .08 .01 .52 .22 .89 - .48 .74 2.39 Govt. deposits in other banks .10 -.,04 .20 .04 .11 -.12 .14 .07 .6 Counterpart funds .10 -.07 .07 ..01 .08 .03 .09 .12 .37 Capital accounts of Central Bank .23 .25 .10 .18 1.151/ .21 .48 .12 3.60 Otber Central Bank liabilities (net) 2. - 10 - 1.1 Total offsets .34 .22 .38 -1.40 .5 1.00 -.14 1.2 Net public sector .12 .21 .16 - .57 - .73 - .20 .04 -.64 Private Sector 2.0 Borrowing from Banks .49 .64 .56 .85 .83 1.20 1.12 .51 9.42 Less: Time & saving deposits .28 .30 .13 .41 .63 1.69?/ 1.25 .41 6.21 Other bank liabilities (net) -.01 .04 .c4 - .03 - .02 .53 .17 .17 .. 2.1 Total offsets .27 .34 .17 ~.38 ~.61' 2.22 1.42 -.07 .. 2.2 Net private sector .22 .30 .39 .47 .22 -1.02 - .30 .. .0 3.0 Total Domestic Factors (1.2+2.2) .34 .51 .55 - .10 - .51 -1.22 - .44 -.71 - .07 4.0 Net Foreign Exchange Transactions .19 -.27 -.07 1.06 1.49 1.17 1.36 .83 12.07 Errors and omissions -.06 .01 .15 .05 .01 - .04- - .13 - - 5.0 Changes in MoneV Supply .47 .25 .63 1.01 .99 .01 .79 .12 annual increase in money supply 3 7 11 10 - 2/ 7 2 - Total Money Supply 7.98 8.45 9.08 10.09 11.08 11.09 11.88 12.00 12.00 % of GNP 18 20 19 19 19 18 18 (18) - 1/ Accumulated profits on exchange transactions from the Central Bank's operations at multiple rates in the early lc50s were included under Government borrowing until October 1960. Part was then t f d t remainder to the Capital account in January 1961. These transfers do not influence the nct offset of the public sector on money supply. 2/ In May 1962 a marked decline in demand deposits and a sharp dcecrease In time deposits followed a change in classi- fication and higher int,erest rates on time deposits. On a basis broadly comparable with 1961 the money supply in 1962 would have increascd by perhaps 0,50 billion baht, or /4 to 5 percent. 2/ Miscellancous accounts of Central Bank included with similar accournts3 of other Banks. Sources: I,F.S. except for Counterpart Funds and for 1964 data which are taken from lonthly Report of Bank of Thailand Table XVIII Central Government Revenue. (actual) (Billions of Baht) 1964/65 1963/64 preliminary budget budget 95 1956 1957 19 58 1-_9. 1960 196061 ;961/62 1962/63 estimates estimates Tax Revenue Income taxes 0.24 0.32 .34 o._36 0.8 0 583: , .68 0.73 . û.81 0.90 'Personal 0.24 0.19 0.20 0.24 0.27 0.37 0.46 0.45 0.47 0.47 0.52 Corporate - 0.13 0.14 0.12 0.11 0.21 0.22 0.28 0.31 0.34 0.38 Imort duties 1._08 1.42 1..49 1.62 1.79 2.0 2.28 2.50 2.73 2.86 2.28 Petroleum products 0.17 0.24 0.25 0.26 0.31 0.-48 0.50 0.55 0.56 0.67 . Food stuffs .. .. 0.03 0.16 0.16 0.18 0.19 0.18 0.20 0.20 0.21 Iiachinery, equipment and vehicles 0-.63 0,87 0,13 0.35 0.32 0.40 0.47 0.50 0.60 0.50 0.61 Textiles - - - 0.08 0.13 0.14 0.15 0.20 0.23 0.22 0.25 Other .. .. 1.08 0.77 0.87 0.85 0.97 1.07 1.14 1.27 1.21 Exoort duties 3/ 0.91 1.24 1.25 .l10 1.16 1.23 1.26 L.16 1.13 11.12 Rice g' ~ 0.82 0.98 1.04 0.94 0.87 0.89 1.02 0.98 0.95 0.95 0.97 Rubber 0.05 0.20 0.16 0.13 0.23 0.33 0.21 0.16 0.16 0.16 0.13 Other 0.04 0.06 0.05 0.03 0.06 0.01 0.03 0.04 0.02 0.02 0.02 Business~xes 0.2 0.44 i- 0.52 Q 0.83 Q;47 1 54 1.68 2e3. Excise t0.s 018 0.23 0.22 0.36 0.41 0.44 0._4_Z 0.38 0.40 0.40 1.21 Bever,-s 0.12 0.14 0.15 0.15 0.19 0.21 0.23 0.25 0.28 0.27 0.32 Petroleum producte - - - -- - - - - 0.762/ Other 0.06 0.09 0.07 0.21 0.22 0.23 0.24 0.13 0.12 0.13 0.13- M5onopolies .1 0.5? 0.56 0.69 0.56 58 Q.56 o.6o 0.2 0.75 Q..84 Tobacco 0.35 0.44 0.43 0.51 0.50 0.53 0.51 0.55 0.75 0.70 0.74 State lottery 0.06 0.07 0.12 0.12 0.04 0.04 0.04 0.04 0.04 0.04 0.10 Other 0.10 0.06 0.01 0.06 0.02 0.01 0.01 - - - Other 0.4 0.48 0.41 0.45 0. 46 0.4 0.49 0 62 G568 Automobile tax 0.02 0.03 0.06 0.04 0.05 0.06 0.07 0.08 0.09 0.09 0.11 Royalty 0.10 0.13 0.13 0.09 0.09 0.113 0.14 0.16 0.17 0.19 0.20 Other 0,35 0.32 0.22 0.32 0.32 0.30 0.28 0.28 0.31 0.34 0.37 Sub-total: Tax remenue 3.66 4.70 4.73 5.12 5.1 6.21 577 8 8.26 o40 Table XVIIi(Cont' :) Central Government Revenue (actual) 1964/65 preliminary budget budget 1953 1956 1957 1958 1959 1960 1960/61 1961/62 1962/63 estimates estimates Contribution of public enterprise. 0.07 0.06 0.11 0.11 0.23 0.14 0.11 0. 20 0.20 0.24 0,35 Bank of Thniland - 0.01 0.05 0.07 0.19 0.11 0.10 0.11 0.12 0,12 - -ublic ,,tilities 4/ 0.04 0.01 0.03 0.,03 0.02 -0,01 -0.01 -0.01 -0.02 -0.01 ~ Others 9/ 0.03 0.04 0.03 0.01 0.02 0.03 0.01 0.10 0.10 0.13 ~ Other revenue 0.15 0.21 0.24 0.27 0.29 0.40 0.39 0.37 0.40 0.48 0.53 Cub-total: "on-tax revenue 0.22 0.27 0._35 0,8 0-52 0,54 0o,0 0.57 o6O 0.72 1.12 Total rev.nue 3.88 4,97 5.08 5,50 5,94 6.75 718 ?.94 53 8,98 _2z3 6/ 1/ Incrnse! mainly due to raising of tax rates on higher inrome brackets. 2/ Follo;ing the start of domestic oil refining it is proposed to raise revenue from excise tax on refined products equivalent to the loss of import duties on crude oil. Including proceeds of Rice Fremium. Post andl telec.=mmunications, 1ýangkok Electric orks, and waterworks only. 1/ The contribution of these enterprises as shown here is moderately smaller than indicated in Table XXIV on the ,inancinr, of Gross Fixed Investment of State Enterprises, because of differences in sources and therefore in reporting: i,heireas the above figures are from the Comptroller General's Department. the data in TableXXIV were compiled by N.E.D.B. largely from the enterprises financial statemernts. 6/ Budget total less estimated receipts from coin issues and gross receipts of waterworks. -urces: Comptroller General Department and Bureau of the Budget. iote: Due to rounding totals do not necessarily add up. Table XIX Central Government Experditure (actual) (Billions of Baht) Budget 953 1.956 1)52 1958 1959 1960 1960/61 1961/62 1962/63 1963/64 1.0 Current Exrenditure 1/ 1.1 Defense, adminetc 2.16 278 2_80 2.61 2.5 00 3.27 3. 43 3.65 Defense and police 1.68 2.05 1.94 1.87 1.89 1.89 2.00 2.13 2.13 2.38 General administration 0.47 0.70 0.80 0.66 0.68 0.73 0.82 0.78 0.87 1.09 Pensions ..2/ 0.02 0.02 0.02 0.18 0.25 0.29 0.32 0.35 0.39 lviscellaneous 0.01 0.01 0.04 0.04 0.10 0.14 0.16 0.20 0.30 0.23 1.2 Interest pameits 001 ..18 Q 3 0.27 0.29 0.33 0.35 0.37 0._39 0.47 Internal debt 0.01 0.17 0.10 0.25 0.27 0.30 0.33 0.35 0.37 0.43 External debt - 0,01 0.03 0.02 0.02 0.03 0.02 0.02 0.02 0.04 1.3 Economic & Social Services / i20 li0 i 681 L 1 L 2(2 1, ._62 27 310 1.4 Total current expenditure .3.4 4. _L8 . Z8 _6 5..28 .28 7 2.0 Capitae eenditure 1/ 4/ 1.08 0.67 07_ .22 _ 7 L_2 L_. __l 2.17 3.0 Loans and rts 5/ _.34 3 0.31 0.L5 0. 60 0.61 0.62 0. 59 ),96 _ .9 Local governments 0.07 0.10 0.09 0.09 0.10 0.12 0.10 0.15 0.22 0.23 State enterprises 0.276/ 0.24 0.36 0.50 0.49 0.52 0.44 0.72 0.76 Other - - -- - - - - - 0.02 7/ - 4.0 Total exnenditure 1/ L.86 24 5.j5 593 _ .6 . 812 3.16 10. 3 5.0 C,rrent revenue 3/ ,88 4.97 .08 .50 5-94 6.75 7.1-8 7.24 8.6/ 8.98 6.0 BFlance -0.c8 -0,51 -0.57 -0.41 -0.40 0.07 -0.36 -0.18 -0.52 --1.85 7.0 Adjustment 9/ -0.96 -0.12 0.13 -0.06 --0.23 -0.11 0.21 0.18 0.29 8.0 2Verall Balance -1.94 -,63 -0.4 -0.7 -0.63 -.04 -0.15 _ -0.23 -L.85 1/ Exc ludes operating expenses of public utilities and expenditures financed from external loans and grants. 2/ Included under "Economic and Social Services 31/ Details in Table XX. 4/ Det ails in Table XXII. ./ For current and capital expenditure 6/ Exc~.uding transfers to Railways and Port Authority against external loans to Government 7/ Interest free loan to Industrial Finance Corporation of Thailand ß/ See notes to Table XVIII. 2/ Extra - budgetary receipts and adjustment to cash basis. Sources: Comptroller General Department and Bureau of the Budget Note:_ After 1960, fiscal years 3ctober 1 - September 30, Table XX Central Government Current Exienditure on Economic and Social Services (actuals) (Millions of Baht) Budget estimates 1953 1956 1957 1958 1959 1960 1960/61 1961/62 192 63 19,63/64 Agriculture 24 44 23 33 45 52 59 73 85 96 Irrigation 35 26 35 63 79 101 107 108 121 132 Cooperatives 45 49 25 22 20 23 27 37 55 29 Forestry 32 42 29 35 38 41 45 47 64 74 Power - - - - - 6 2 2 12 18 Industry and mining 13 17 12 14 17 22 25 39 30 42 Highways 21 19 134 96 111 127 172 140 240 305 Other transport & communications 12 26 15 41 50 23 31 41 39 46 Other economic services l/ 52 66 88 86 95 116 129 115 184 245 Education 797 1022 984 1069 1168 1193 1320 1362 1445 1649 Health 109 119 80 20? 161 188 214 219 271 312 Other social services 63 2/ 72 223 143 28 53 79 91 145 156 Total 123 1502 1648 1809 1312 1945 2210 2274 2691 3104 1/ Including Thai Government's contributions to the Counterpart Fund established under the US aid program and utilized to finance development expenditures. 2/ Including Pensions. .ource: See Table XIX. Table XXI Central Goveriinent; Financing of Overall Deficit Budget 1963/64 1953 15 97 1958 192 1960/61 1961/62 1962/6 1963/64 (E ctu Ovrl Deficit :-1937 2 : D - =15 2 32 =lL ··-3 Financing 1937 627 4Y £,2 i630 £2 16 2 328 18__6 --300 Repayment of External Loans (-) - 19 - 41 - 35 - 37 - 39 -41 - 35 - 53 - 45 - 60 - 60) Borrowing from Government Savings Bank (Net) - 22 18 68 44 99 173 213 238 353 400 320 Borrowing from Public (Net) 60 L07 34 43 85 269 157 140 144 2/ 240 ansionary Financin: 1292 85 =. -186 -323 -124 1506 -200 Net borrowing from Commercial Banks 75 - 14 - 11 63 108 211 478 626 416 3/ Bank of Thailand 1844 542 239 :245 524 298 470 -349 70 1000 Exchange Equalization Fund - - 180 60 - -270 - 18 - - Net use of cash balance -12 - 1 - 64 89 .-121 -504 -859 -466 -86' -. Issue of new coins 11 16 15 17 19 9 10 14 47 90 1/ See Table XX, 2/ Included under Borrowing from Commercial Banks. 3/ Includes Net Borrowing from Public. Source: See Table XIX Table XXII Public Sector C0ita-l Formation illion Ba3ht/)61 i959 1960 1960/61 1961/62 1962/63 Budget,- Estimated actual 1,0 Agriculture 1.1 Irrigation 211 274 330 417 424 457 501 Government budget Tw 3 Bhumipol Dan 91 122 1T 209 200 137 17 Chao Phya Irrigation Systen 80 87 70 86 65 40 40 Chao Phya III (djkes and ditches project) - - - 20 30 30 P etchburi - -- - 20 30 30 Meklong - - - - - 20 Other 40 63 121 122 100 109 109 External loans - - - - 19 93 137 IDRD: Chao Phya III - -- - - 7 58 Petchburi - -- - 19 28 21 / Meklong - - - - - - AID' - - - - -58 58 Other: Nan - - -- - - Other projects - -- - 1.2 Other agriculture 39 39 66 80 108 100 100 ov rrmc-nt bdet -7 ~3 1F T-U T3 T5 5 Cooperatives -7 -7 10 :22 20 20 Forestry 2 1 18 22 6 5 5 Other agriculture 6 5 7 10 15 30 30 State Enterprises' Domestic r30 30 38 38 65 45 45 Forest Industry Organization 30 149 30 30 Rbber Plantation Organization 3 8 8 8 Other 5 8 7 7 (See footnotes at end of table) Table XXII ( Continued) 1963/64 1959 1960 1960/61 1961/62 1962/63 Budget/ Estimated -- actual Exterrial grants: AID 49 37 30 25 25 _0 Lo 1.3 Total Agrifuture 299 350 426 522 557 595 641 Government budget 220 28~ 3 75ý uu 4 W9 Stat e Enterprises' domesti c resources 30 30 38 38 65 45 45 External loans to Government - - - 19 93 137 External grants: AID 49 37 30 25 25 40 40 2.0 Pouer State Enterprises' domestic resources 77 "123 225 138 249 243 191 Yanhee El eicty Authority ¯22 3 ~~ ~5- ~4~ Hetropolitan Electricity Authority 10 10 130 72 125 79 79 Provincial Electricity kathority 35 35 25 12 42 57 30 Lignite Authority 10 15 20 20 30 12 12 orth East Electricity Authority - - - -- - 47 20 2.2 EXternal loans 369 395 h50 466 51h 552 308 Yanhee Eleetricity Authority IBRDi) 238 221 314 254 234 198 110 Eximrr 131 108 31 116 75 - - Metropolitm Kle ctricity Authority: DLF - 66 105 70 53 83 83 Provincia. Electricity Authority - - - 97 - Lignite Authority - - -6 143 85 85 North East Electricity AuthoriLty - - - - 9 30 2.3 External grants: AIJD 70 78 28 - 2 - - 2.4 Total Power 516 596 703 604 765 795 499 State Enterprises' dornestic r esources 77 123 225 138 249 243 191 External a , r S-a -e Enterprises 369 395 450 466 51! 552 308 External Grants 70 78 23 - 2 . Table XXII ( Continued) -----19 63/6h 1959 1960 196o/6L 1961/62 1962/63 BudgVe Estimated actual External grants 70 78 28 - 2 - 3.0 Transportation and Conmunications 3 91 7iighways b t7 490 351 575 593 1 132 650 GoVeRrhént budget 2-37 17 "66 MiD 377 5ý'759 03 Tern ns ~ - - - - 37 - IBRD ¯ ~ - ¯5 Exin Bank - - - - ~ 215 - New loans - - - ~ 84 External grants: AII" 210 312 85 129 216 200 200 3.2 State Railways 186 125 70 141 115 599 bil StatUeEn erisel donestic resources 170 125 70 108 106 367 250 Extenal loans 9 232 161 IBRD-:eIsting ~~~6 232 new - - - - - 232 - Germany - - - - h 232 100 AID (PL 480) - - 33 5 - - External grants: AID 8 - -- -- 3.3 ho 5 83 46 44 141 50 State Enterprisesu domestic 4 rcsources -o _5 50 åå U 103' 50 External loa rs - - 33 2 - - DLF - - 33 2 - - 3.4 Air Tranortation 17h 44 37 160 75 4o ho Airfields and air services Eea n A154 24 20 136 ho Table XXII (Dntinued) 1963/64 1959 1960 1960/61 196l62 1962/63 Budget Estirated actual Thai Airways State Enterprise' diomestic re sources 20 20 17 24 35 40 40 3.5 Telecommunications 30 64 90 312 202 202 Telephone Ognzto resources 20 3,8 50 33 50 122 122 External loans 1B - - - External glrantbs: AID 10 , 02226808 10D io 40 22262 80 80 3.6 Post Office State Enterpriý ses' domestic resources 20 20 27 25 95 85 85 3.7 Express Transport Organization State Enterprises' domestLc resources 5 _5 8 9 _ 10 _10 3.8 Other Government budget 22 1_ 31 48 51 136 _70 3.9 Total Transportation and Cormunications 929 805 697 1,059 1,292 2,037 1,518 Government budget 264 190 9 494 42 711 520 State Enterprises' domestie resources 275 253 222 243 337 727 557 External loans to Government - - - - - 357 - to State Enterprises 8 18 33 35 9 232 161 External grants 382 344 145 287 518 280 280 Table XXII (Conti.nued) 1963/64 195, 1960 1960/61 1961/62 1962/63 Budge: EstimatEd actual h.0 Industry and Mining 106 223 211 436 340 276 Government budget 27 ~10 2~5 13-66 State Enterprises' domxestic, resources 95 100 133 154 186 174 1.74 External loans to State Enterprises - 92 62 253 89 98 84 External grar ts: MUD 6 4 6 4 2 2 2 IFCIT loans. 9/ ! - - - ..-0 - 5.0 Education 201 187 228 233 310 h11 360 Government budget T7 106 16" 9~0 External grantS ý AID 64 81 50 53 4 c 401! Other - - 10 20 20 20 20 6.0 Health 73 51 54 121 1- 166 130 Government budget -2 21 ~2- -2- ~'5d cternal grants: AID 46 30 30 86 86 80 80 7.0 rater Supply and Sewecrae h4 131 80 144 376 574 460 overrmient budgetI/ 38 ~ ~3 006 Td External grants: iID: 13/ 6 76 20 - - 20 20 J,xternal loans: water supply - -98 323 388 340 drainage - - - - - - . 8.0 1lis cellaneous 206 202 250 323 340 521 ~Uovemmentbudget T T"3 175 73 no) Z2r Economic and social services n.i.,e,16 l4 43 45 57 140 80 of which: Land Settlement - 12 15 20 40 40 Table XII ( Continued) 196 3/64 19 5 60 196 0 p/61 961/6 1962/63 Budget : Estimated actu al Administration buildings and miscellaneous 75 89 132 193 192 284 220 State Enterprises 55 9 _7 _85 91 97 97 9.f Tna1 Gnvprnmert ard State ELt erpris es 2374 2_45, 3 2 4,>50 5.711 Li n Doet escurces 17 1j 1,390 L > l1- 2 399 3-7 U,6 entrai iovernmen. 'rect) 72 ~~75 1,092ý ,h7 1,47 2,173 State Enterprises I 592 605 693 658 928 1, 286 1.,064 External resources 1,000 1,155 86 1.327 L_51 2252 1,512 Loans to Central Government - - - 98 342 88 b77 State Enterprises 377 505 5145 754 612 882 553 Grants 623 650 319 475 697 482 482 10,0 Local Governmentst Capital Formation 170 200 22) 325 402 460 42C Transfer from Central Goverrient 100 112 1] 6 211 223 2920 Other resources 70 88 12:2 179 190 237 200 11.0 Total Public Sector Capital. Formation 2,544 2,75 2,869 .39 77 4,452 6,171 4,e l/ Budget and NEDB estimates of loan disbursements. 02/ Lam Pao, Lam Pra Plern and Mae Tang projects. Mostly to Government until Metropolitan Electricity Authority was set up. Includes some loans repayable in local currency. Includes $ 2 million capital expenditure by Bangkok Dock Company. Supplier's credit to Thai Rediffusion Company. 7/ Includes some loan component repayable in local currency. I Transfer from Central Government. 2/ Sub-loans by Industrial Finance Corporation of Thailand financed by Loans from IBRD and Kredietanstalt (Germany). 10/ 1/2 of pipe line as of December 31, 1963. 11/ Water Supply. 12/ Including transfer from Central Government. Sources: Comptroller General Department, Bank of Thailand, NEDB and USOM/AID Financial Reports. Note: External aid excludes expenditures on defense, police and public administration financed by the U.S. Government. The aid estimates include direct dollar disbursements of project aid and withdrawls of counterpart funds generated by non-project aid. Total aid disbursements as reported by fiscal sources differ somewhat from the total of U.S. Government grants figures reported in the balance of payments because of: i) recording lags, and ii) changes in counterpart balances. Over the period 1959-1963 ) 108 million were used to build up counterpart balances; total balances outstanding at the end of 1963 were 484 million Baht. Table XXjjj. State nverprises: OApit_L Formation and its financing, 1961/62-1963/bh (hillion Bahit) 1559 1960 1960/61 1961/62 1962/63 1963/64 1963/64 Estimated Actual Gross Fixed Investment 969 1110 1138 1412 1540 2168 1617 Power 446 518 675 605 763 795 L99 Yanhee Electricity Authority 391 392 395 405 361 246 158 Metropolitan Electricity Authority 10 76 235 142 178 162 262 Port Electricity Authority 35 35 25 12 42 154 30 Lignite Authority & Northeast Electricity Authority 10 15 20 46 182 233 147 Transport & Communica- tions 263 271 255 278 346 959 718 State Railways 178 125 70 141 115 599 611 Port authority 40 45 83 46 44 103 50 Telephone Organiza- tion 20 56 50 33 50 122 122 Thai Airways 20 20 17 24 35 40 40 Post Offices 20 20 27 25 95 85 85 Other 5 5 8 9 7 10 10 ManufacturinR 95 192 195 407 276 272 2,40 Oil refining 270 84 10 10 Weavinq Orr;ni7_qtion .. 5 h7 101 87 NEDCOL.. 19 28 18 18 Tohnno Mononolv 62 h3 67 67 Other 51 74 76 76 Agriculture 30 30 38 38 65 45 45 Forestry Organization .. .. . 30 49 30 30 Other 19 1t A 1qI Financial & Iscellaneous Insti+tutn 11 00 75 70 70 70 70 Naioa00 Eomon C7 *'National Economic Development Corporation Table XXIII (Continued) 1961/62 1912/63 1963/6. Fina n ff 1. Oneratirg Surplus before depreciation: 6 Poer 152 168 20) Yanhee Electricity Authority -0 73 (100) Merpoia Electricity Authority.~ 39 5 62 Provincial Electricity Authority 42 32 34 Lignite Auth. & Northeast Authority 11 12 8 Transport and Comunications 282 264 326 o L14.~ ±Ld 1D 4-1.-1- -, 77.4 -M.4 - 1 Port Authority 31 62 Telephone Oraiato47 651 [f5 .L -i-tiilviit- LIvralåJL6d IUXUII utU7 Thai Airways 15 14 21 Other 10 10 1 Planuf acturing 139 99 88 011 refining -3 - Weaving Organization 1 2 2 Nat ional Economic Development Corporation -14 -17 -2 Tobacco Monopoly 225 56 114 Other -76 61 74 Agriculture 68 23 37 Forestry O2ganization 23 37 Other - - Lottery Organization, Financial, Institutions & Idscellaneous 0 7U 7u All Other 339 1, Pet of Contribution to Central Gcvernment Budget from Tobacco Monopoly, Forestry Organization, Bank of Thailand and miscellaneous commercial institutions. Table XXIII (Continued) 1961/62 1962/63 196)j/6h 1963/6h 2. Plus: Government Grants & Loans(Net) 337 609 683 $58 Power 57 174 226 150 Yanhee Electricity Authority 37 60 113 113 Metropolitan Electricity Authority 11 61 9 9 Provincial Electricity Authority 3 28 45 -4 Lignite Authority & Northeast Electricity Authority 6 214 59 32 Transport & Communications 7h 188 334 285 State Railways T 32 13 1 Port Authority 31 25 h9 - Telephone Organization 10 36 31 31 Thai Airways 3 1 28 28 Post Offices 25 95 85 85 Other - - 1 6 6 Manufacturing 175 232 109 109 Oil Rpfininq 67 19 7_ iT Weaving Organization - L1 41 41 NECOT. 100 116 27 27 Tobacco Monopoly - - - - Other 56 27 27 Ag-rio1i L 1+ .l 1h Forestry Organization Other b 15 1h lb Lotter OrgLn.~A. .-,t1 4 tc in- 1959 1960 1960/61 1961/62 1962/63 1963/64 1963/6h 3. Plus: Use of External 1. rnr'7 efn0o UVJU._ _)U7 Jy4 LUU L4O Yanhee Electricity A(f '1 '7 %nn-op AULIUV.L2bY -L/U L-' L%j7±7 Metropolital Electricity Authority - ou U u) u) Provincial Electricity Authority - <7 Lignite Authority A Northeast Electricity Authority - 26 152 M7IW 11) Table XXIII (Continued) 104 lrQ1oAA 10An~f/4 10oA1/Ac 1oAO/Kn 1OA-2/(,L 10AiQ/ALJ Transportr-._ Corrmumic_ - tions - - - 35 9 232 161 State Railways 33 9 232 161 PD0 r+ A-+hor-it +rr ftL 'Si. V .tit r_JX - - - Telephone Organization Post Offices n,4-i -I_- ainu± a ubur.ng __ of n0 014 Oil Refining 253 69 - - jeaving Organization - 20 9o NEDCOL - - - Tobacco Monopoly - Other - Agriculture - - - - - - - Forestry Organization Other Lottery Organization etc. - All Other 1961/62 1962/63 1963/64 h. Less External Debt Repayments ' 147 141 158 Power 23 23 98 Yanhee Electricity Authority 23 23 73 76etropolitan Electricity Authority Provincial Electricity Authority - Lignite Authority & Northeast Electricity Authority - - 25 Transport & Communications 23 25 26 State Railways 1 19 20 Port Authority 6 6 Telephone Organization - - - Thai Airwnvq Post Offices Other understated, particularly in recent years. Table XXIII (Continued) Ma,nifaturrn9 3 il ile a vi ng - 17 ljEDCOL 94 86 - Other 7 7 17 Agriculture - Fore str3r 0r gani zation0 Other Lottery All Other 1961/62 1962/63 1963/64 1963/64 5. Less: All Other (Net) 281 197 85 202 Power 47 70 89 65 Yanhee Electricity Authority 3' (2) Metropolitan Electricity Authority -22 -13 - 8 - 8 Provincial Electricity Authority 33 19 22 - 2 Lignite Authority & Northeast Electricity Authority - 3 6 -17 -17 Transport & Communications 90 90 -93 28 State Railways 27 71 ~75 172 Port Authority 25 16 2 6 Telephone Organizatinn 114 51 -39 -39 Thai Airways - 6 -20 19 19 Post Offices - - - Other 1 2 - Ianufacturing L9 51 69 89 Oil Refining ~0 ~1 1 ~.. Eeaving Organ:ization -4 16 23 23 NEDCOL -27 -15 7 7 Tobacco Monopoly 166 13 47 47 Other -126 -36 -20 8 Agriculture 34 -25 10 10 Forestry Organization ¯8 -25 7 ~7 Other -14 - 3 3 Lotterv OrsanizaltJon etc. - -- All Other 51 11 10 10 Snure-: N-tirnal Ecnomicr Dlo)pr mfnt Rofird financn ia nccountin hc e major enterprises and Mission estimates for 1959 and 1960. Table XXIV Loca erres Caital Format,ion and Its Financirn (Million baht) 1953 1956 1957 19e5 9 1960 1960 960/61 1961/62 1962/63 196/6 Total Fixed Investment 70 130 160 140 170 200 220 325 402 460 Financing: Transfer from Central Government 73 105 88 93 106 118 104 151 217 229 External Loans - - 40 - - - ... Current Surplus and borrowings 25 38 53 70 88 122 179 -91 237 Les External Loan Repayments - - -6 -6 -6 -6 -6 --6 -6 -6 Soures: Central Government Budget, Bank of Thailand, N.E.D.B. and Lurvey Mission Repcrt.('9}59