Bangkok: The Thai government turned its attention to new measures to revive the economy on Wednesday, a day after the end of violent protests that further dented confidence in a country heading into recession.
Thailand kept a state of emergency in the capital for a fourth day and security forces kept tight guarded around the prime minister’s office, epicentre of protests by ousted premier Thaksin Shinawatra’s “red-shirt” supporters.
An end to the latest round of political chaos in the kingdom allowed the government some breathing space to focus on fixing the economy.
Finance Minister Korn Chatikavanij said Thailand may have to borrow more to finance additional stimulus measures to compensate for any economic losses from this week’s political turmoil.
“With tourism expected to suffer more losses, and private investment likely to fall after what happened this week, the impact would likely be reflected in more tax revenue shortfalls and increased fiscal deficits,” Korn told Reuters.
“We will have to review our public sector borrowing plans. With the problems this week, fiscal stimulus will probably need to play a bigger role to boost the economy,” he said.
The Thai Cabinet will meet on Friday to discuss the budget and the stimulus package, government spokesman Panitan Wattanayagorn told Reuters on Wednesday. He declined to say where it would meet due to security concerns.
Financial markets were closed for the three-day Thai New Year holiday, but will reopen on Thursday. Shares and the baht were expected to come under selling pressure.
“Selling pressure will come from foreign funds constrained by their policy of not investing in countries where there is a state of emergency in place,” said Tisco Securities strategist Viwat Techapoonphol.
An expanded stimulus package could boost employment and purchasing power in the countryside, where Thaksin has long been popular, but few believe that Thailand is heading for a period of prolonged stability.
“The whole vicious cycle seems set to continue,” said Danny Richards, senior economist at the Economist Intelligence Unit.
In broad terms, Thailand’s crisis is a battle between the “yellow shirts” — royalists, the military and urban Thais, who back Prime Minister Abhisit Vejjajiva — and the “red shirts” -- supporters of former premier Thaksin Shinawatra whose power base was mainly drawn from the country’s millions of rural poor.
The “red shirts” consider Prime Minister Abhisit Vejjajiva’s goverment illegitimate because he came to office in December via parliamentary defections they say the army engineered.
They have vowed to resume their campaign to force new elections — which they would be well-placed to win. Abhisit has ruled out elections until law and order is restored.
Thai courts have issued arrest warrants Thaksin and 13 leaders of the United Front for Democracy against Dictatorship (UDD) for violating state of emergency regulations. At least three were already in custody.
The Foreign Ministry revoked Thaksin’s passport, saying he helped instigate the unrest that caused an Asian summit to be cancelled lAst weekend, the government spokesman said.
“According to the law, the government has the right to revoke a passport of a person who damages the country and the Pattaya incident has shown Mr.Thaksin is trying to damage our country,” spokesman panitan said.
Thaksin, ousted in a 2006 coup, lives in self-imposed exile to avoid a two-year jail term on a corruption conviction. His whereabouts are not known.
A nearly three-week siege of Government House, where Abhisit’s administration has offices, ended without bloodshed on Tuesday when Thaksin supporters decided to surrender with hundreds of troops and riot police surrounding them.
Two people died in skirmishes between “red shirt” protesters and local residents, the authorities said, while at least 123 were injured in clashes between soldiers and protesters trying to blockade a major road junction on Monday.