Tuesday, December 27, 2011

B350bn in flood bonds planned Some schemes may be ready for rainy season

The cabinet will today consider a proposal to sell 350-billion-baht in bonds domestically to pay for long-term flood-prevention infrastructure.
Commerce Minister Kittirat Na-Ranong, chairman of the Strategic Formulation Committee for Water Resources Management (SCWRM), said the committee would seek cabinet approval for floodway projects to be built on both sides of the Chao Phraya River but exact locations and designs are pending the cabinet decision today. The measures would focus not only on sparing Bangkok from floods. Other provinces along the river will also benefit.


The floodways and related projects are aimed at ensuring that areas under protection _ and particularly economic zones and densely populated areas _ would be spared from future floods.
Mr Kittirat conceded that certain agricultural zones could not be protected.
"In case of massive floods affecting the farming sector, we will do our best to take care of [flooded areas]," he said.
As for a short-term plan for 2012 and 2013, the Strategic Formation Committee for Reconstruction and Future Development (SCRF), chaired by Prime Minister Yingluck Shinawatra, yesterday approved a 16.5-billion-baht water management plan to prevent floods and droughts.
A total of 12 billion baht will be drawn from the 2012 fiscal budget while the remaining 4.5 billion baht will be drawn from the 2013 budget.
The plan will be considered by the cabinet today.
SCWRM secretary Vichien Chavalit said the short-term plan included measures such as improving existing sluice gates and dykes, improving dam management, compensating people affected by floods, managing water resources during times of flooding and droughts, and improving the draining of water into the Gulf of Thailand.
It would also establish a single command body for the nation's water management.
He said the government expected most short-term projects would be completed before the new rainy season arrives.
A single command for water management will be established as a committee which will include related agencies such as the Irrigation Department, the Interior Ministry and Natural and Resource Ministry, among others.
The Irrigation Department will serve the secretariat office for the committee. In the short term, the department is authorised to draw up water management plans to propose to the committee.
Mr Vichien said in the long term, a permanent organisation for water management will be established.
Meanwhile, cabinet will also consider a proposal to transfer to the Bank of Thailand the Finance Ministry's debt burden from its 1997 banking sector bailout. Virabongsa Ramangkura, chairman of SCRF, said the transfer from the Financial Institutions Development Fund (FIDF) would provide more room for the government to borrow.
The fund has outstanding principle of 1.4 trillion baht in the form of bonds issued to solve the problems of financial institutions dissolved during the 1997 financial crisis.
The Bank of Thailand has repaid only 300 billion baht of the principle because by law it can do so only when it books currency management gains.
This puts a hefty burden on the Finance Ministry, including an interest payment of around 60 billion baht per year.
However, the central bank's monetary status is now strong enough to manage this sum of FIDF debt, according to Nibhat Bhukkanasut, a member of the SCWRM.
The government also needs room to borrow from domestic sources to maintain fiscal and monetary principle as it does not want to use foreign reserves. He said the government will allow the Finance Ministry to issue bonds worth 350 billion baht to use in long-term projects to build infrastructure that can strengthen the country's economy.