Fiscal policy unaffected by state officials’ pay raise

BANGKOK, 23 June 2010 (NNT) – The salary hike for government officers by 5% will not affect the financial policy, according to the Bank of Thailand (BoT).

BoT Deputy Governor Bandit Nijthaworn insisted that the government’s measure to increase the salaries of state officials by 5%, starting in April 2011, would not cause any change in the fiscal policy. He explained that the budget of 30 billion THB needed for the pay adjustment would come from amounts reserved for other purposes in the 2011 fiscal year. Therefore, he assured that the measure would not require an increase in the fiscal budget and would have little effects on the overall economy, including the inflation rate projected by the BoT.

Mr Bandit also speculated that the Monetary Policy Committee (MPC) would use its meeting on 14 July to update all financial data in order to ensure accuracy in its estimation of the economic condition and the inflation trend.

In response to concerns that prices of products would climb up in accordance with the authorities’ salary hike, the BoT Deputy Governor stated that such price increases were unlikely due to the fierce competition in the market at present.