The government planned to issue samurai bonds worth 38 billion yen or around Baht 14 billion with a maturity of three to seven years around the middle of next month to refinance the debts of state enterprises, a Ministry of Finance source said.

 

The funds would be used to repay loans to Japanese creditors, including money borrowed by Thai Airways International Plc, the Telephone Organization of Thailand (TOT) and the Metropolitan Electricity Authority (MEA).

 

Thai Airways would issue yen 5 billion of three-year bonds, Baht 9 billion of five-year bonds and Baht 9 billion of seven-year bonds. The MEA would sell yen 4 billion each of three-, five- and seven-year bonds while the TOT would issue yen 3 billion of three-year bonds.

 

Earlier Sommai Phasee, deputy permanent secretary of the ministry, said it would seek funding from the Japanese market to refinance foreign debts, which were largely denominated in US dollars. But he said the ministry would also maintain a balance between the yen- and dollar-denominated debts to cushion against exchange-rate fluctuations.

 

The Consumer Price Index in September rose 1.4 per cent year-on-year while the inflation rate in the first nine months of this year was 1.8 per cent, according to the Internal Trade Department. But the department still maintains that the year-on-year inflation rate would meet the current target of between 2 per cent and 2.5 per cent.

 

Siripol Yodmuangchareoan, the department's director-general, said that the index in September was 133.0, an increase of 0.3 per cent from August.
The index of non-food sectors rose by 0.3 per cent in September compared with August, mainly because of higher oil prices and increases in the garment sector. The index for the food and beverage sector dropped by 0.5 per cent due to the low price of fragrant rice and the impact of chicken and vegetables flooding the market.

 

The core CPI, excluding the prices of food and fuel oil, did not change in September from August, but rose 1.4 per cent year-on-year, and 1.3 per cent in the nine months to September.

 

The Commerce Ministry's Department of Export Promotion is moving quickly to revise export strategies due to expectations that orders will plummet next year as a result of the recent terrorist attacks on the United States.

 

We were not worrying much about exports from now to the end of the year because orders had already been placed, but next year's exports would be hard hit due to the global uncertainty, the department's director-general Banphot Hongthong said.
The uncertain outlook made it impossible to forecast the exact level of next year's exports, Banphot said.

 

The value of the country's exports was expected to shrink 8.1 per cent this year from last year to US$ 64.2 (Bt2.9 trillion).
In the first eight months of this year exports have not fared as badly as expected, growing 3.71 per cent year on year, Banphot said. The department was targeting $ 5 billion a month in exports for the remainder of the year, he added.
The ministry would seek ways to maintain market share in traditional export markets such as the US, the European Union and Japan as well as new markets to substitute for export losses in the three traditional markets, Banphot said.

 

Currently, markets outside the big three buy 30 to 40 per cent of the country's total exports in term of value.

 

Products with high export potential and a high level of domestic content would be considered for promotion, Banphot said. The department would also consider increasing its present at international trade fairs.

 

The Finance Ministry announced that it would issue Baht 220.4 billion worth of government bonds, with 5-20 years maturity, during the 2002 fiscal year. The first tranche was to be sold next month.
The ministry planned to issue bonds worth Baht 20 billion in the first quarter of the year, while the remainder would be sold gradually by September next year, it said in a statement.

 

Of the total, Bt 90 billion-worth would be used to refinance debts carried by the Financial Institutions Development Fund, which had racked up debt of Baht 800 billion while bailing out financial institutions between 1996 and 1998.

 

A source at the ministry added that the bonds would also be used to finance the budget deficit, which was set at Baht 200 billion for the current fiscal year beginning October 1. While the state would need to raise Baht 200 billion from the bond market, state enterprises were expected to issue bonds worth Baht 120 billion, and the private sector would probably need about Baht 80 billion.

 

Finance Minister Somkid Jatusripitak and other policy makers said the low interest rates and surplus liquidity in the market presented a great opportunity for the government to balance the deficit through bond issues. The bonds would give the government low-cost funds while absorbing the liquidity in the market.