Thailand - Economic situation and prospects of Thailand

R E S T R I C T IE D Report 10. FE-15a This report was prepared for use within the Bank. It may not be published nor may it be quoted as representing the Bank's views. The Bank accepts no responsibility for the accuracy or completeness of the contents of the report. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ECONOMIC SITUATION AND PROSPECTS n'V rT'TJATT ANTT Fetarember East 196 Far East r"TTDIDV?Ajt-V WfTTTTA:T PWT'T'C One Thai baht = U. 0 t nA. One dollar = $21 One million baht = U.2S. 048. 000 One million dollars = 0.1, 000.,000 overnmen. .c . . . . . ..... . . ............. 1. The ThaLi Economy *o.........o.eeo Output Trends . .......... ...o e o 1 Goverrnent Fi.nance ....... o1 ..... . ... 2 The Balance of Payments . . ..- Exports .................................. Imports ............................ . 6 Terms of Trade . ........ . Monetary Developments .*.....*.........n..... 7 II. Economic Prospects .......................... 9 The General Outlook ..................... 9 Public Development Priorities ......o..o. 10 The Northeast o..............O......... 10 Power ................ .......... 10 Transportation . ..... ... oo*ooV ..*..**..o.. 11 Irrigation ............................. 12 Municipal Facilities ......o.............so 12 Economic Services ........................ 12 Prospects for Development Financing ....... 13 The Balance of Payments Outlook ........... 15 Rice ............................. 15... 1 Rubber .1 Tin ................... .. . .1@ Teak ....... ................ . 16 Other Exports ............................ 16 Invisibles ........... o..................... 16 III. Creditworthiness .... . . . . 17 STATISTICAL APPENDIX 'RA.0Tr. T) ATA Arpn a Ch,000 snnre kiinmgtmna Annual rate of growth: 2.5% (approximate) GNP (1958): $45.2 billion Trd !4 -;s- s f - nen lfl N ~c n * j4 7..') nice -70 Textiles 147 Rubber 327 Petroleum prod- ucts 11% Tin 6% Machinery and transport Other 27% equip. 17% Other 58% Government Financial Transactions (1959 actual): (billions of baht) Receipts 6.06 Expenditures 6.66 Deficit .60 Public Debt (July 31, 1960): Internal 08.31 billion or $418. million equivalent External (payable in foreign currency) $152.51 million (payable in baht or US$) $h9.74 million Total $621.07 million equivalent Official Gold and Foreign Exchange Holdings (July 31, 1960): Official holdings $332 million equivalent rCOnOMvT(! THATTT AWn PROSPECTS OF THAILAND Summary and Conclusions 1. The recent economic record of Thailand has been one of substantial growth of population in most recent years, even though population has been increasing byr 2- C f or mo I~-ea T he pop"Jaton pace has been -P -I--- ~ --'i-c production, the traditional occupation of the majority of the Thais. But this crops and by a marked expansion in other sectors of the economy. 2. There has been some monetary expansion originating mainly through budget financing byth ban1in system.*_ S nce r'9, hoLvlir th caeofCh ina ing has usually been moderate and this year will be at a record low with a nearly balanceu udget. The rate of monetary expansion appears to have corresponuded fairly closely with growth in real output. Price increases have been small, the exchange rate has been stable and reserves have accumulated (except In 18 when there were exchange losses due to adverse export developments). Although the current balance of payments has been consistently in deficit for some time, the deficits of most recent years have reflected a rising level of external assist- ance mainly from the United States. The assistance has been more than sufficient to balance the foreign accounts except, as noted, in 1958. 3. Prospects appear favorable in Thailand for continued economic growth along similar lines to those of recent years. There are large opportunities for further agricultural expansion, even though rice output may not increase much faster than domestic requirements. And there seems every reason to expect the expansion of industry and other non-primary activities to continue. The gains should be large enough to keep output growth ahead of that of population. But they may not be as large as in recent years. 4. One reason for slower growth prospects is that the balance of payments may be a less buoyant factor in the economy than during the past few years. Export volume should continue to expand but terms of trade prospects are less favorable with the outlook for a decline in rubber prices and possibly also in rice prices. And foreign aid is not likely to follow the rising trend that characterized the period since 1955. Hence, growth in exchange availability seems likely to slow doim. 5. There is a further problem that, despite the presently favorable government financial position, there may be growing difficulty in financing important public development priorities from domestic resources. This problem arises from depres- sed rice prices and a probable need to curtail export taxes on rice in order to improve the means and incentives of the rice farmers to increase output. Such a curtailment would offset some of the prospective gains from other tax sources and result in slower revenue arowth than during the last few vears. A. It should be nossible. however, for Thailand to meet nart of its develoment financing problem through foreign borrowing. The service burden of the present external debt is relatively light- Mith its nresnt and mrn'petiveehane - ii - earnings, a flexible import pattern, and ample foreign reserves, Thailand could carry a larger external debt without serious difficulty. Technical and administrative capacities appear to be more important limitations on the sbale of sound external borrowing than creditworthinessa r0Vn?MTr4 QTPTTArPTT% AUn MDPQDVOrP OF THAILAND I. THE THAI ECONOMY Output Trends 1. The Thai economy appears to have been growing in the past decade at a real average rate of 4 or 5% a year. Gross investment relative to uve nas been running around 15% - about two-thirds private and a third public. The increase in GNIP in the last two years was below the longer term average because or a-verse weather and below-average harvests. It will probably be up again this year with more normal crop conditions* 2. In per-capita terms, the average annual gain has probably been around 2%. This is uncertain, not only because national income data are poor, but also because population statistics are not much better. United Nations studies indicate that the population, now around 24 or 25 million, is growing at the annual rate of 2.5% or more. 3. Along with considerable growth of the economy, there has also been a marked trend toward diversification of economic activity in recent years. This has resulted not only from higher growth rates in sectors outside the dominant agri- cultural sector, but also from a widening variety of production within the agri- cultural sector itself. 4. Production of rice, the traditional mainstay of the economy, has been rising slowly if at all - certainly more slowly than population growth. It has declined from about half to around a third of total agricultural value since the early 1950ts. partly because of the low rate of increase and partly because of very large advances in other lines of farm output. Outstanding among the latter are an increase in rubber production from around 100,000 tons in 1950 to about 170,000 tons at present; in maize production from 27,000 tons to about 300,000 tons: a four or five-fold innrea in qnear ane; shtantial Pxnansion in tapioca flour and in fruits and vegetables; and other large increases in coconuts, kenaf. tobacco. cotton and other crops and livestock- Tn the neriod 1952 to 1957-58 total agricultural output increased in real terms by around 20% even though rinp prodntion was ahout cnnstant. 5. Thed chinaingy positio%n of -rice is also refletedor in exo+~ Thi. yearm fo-r the first time rice will probably be in second place to rubber on the export and low rice prices. But it also reflects a nearly 50% increase in rubber level or sagging. 6. Outside agriculture, other lines of primary production have been sluggish yi l 1IeJ L1t,U lJIiUUmtUao n rate o1 ihrUy11P LJL in mining, and, technical and market limitations on the rates of fishery - 2 - 7. On the other hand, manufacturing has been increasing rapidly. Between 1950 and 1956 manufactured output apparently increased four or five times. Subsequent data on growth in manufacturing is lacking. But a continuing high rate is indicated by the extensive list of additions to industrial capacity in the last two years which have qualified for benefits under industrial pro- motion legislation. This list includes manufacture of sugar. alum. tanioca flour, gypsum, cement, dairy products, seasoning, shoes, cotton, textiles, other fiber croducts. batteries. metal drums, norrupated sheets. Pharmaceuti- cals, fishing nets and assembly of motor cars. Some foreign interests are included in this list but the amount of new fornian nanital involved annears to be quite small. 8. There are numerous other indications of fairly rapid economic growth in the economy generaliv inliuding an arAmae anal inceon in rilTany freioht traffic by over 10% since 1954, a rate of increase of motor vehicles in the ?n -r - npo -k-U ';no n ea V.-C -neiIA per4.iod~ ,.u±LJ tion as indicated by the sharply rising trend of imports of construction materials and fP domestic I an a, "0a anulN in electric power consumption. Government Finance 1/ 9. Fiscal policy in Thailand in recent years has been fairly conservative -xcep4 Ui1 nrl_ (I--- P[LJaJu*ryfin n -d4 4_±±itI on bank credit has since continued but usually on a moderate scale and without serious auverse monetary consequences. During lv95-59 the annual level of budget financing on bank credit was usually around 7300-400 million (except for an increase to POuu million in 1956). This was equivalent to about 0% of total expenditure and to around 4 or 5" of the total money supply. 10. There was the threat of a sharp increase in borrowing from the central bank in 1959 when the original budget would have involved bank financing of 0700 or 800 million. This was the result of a slow-down in normal revenue growth because of adverse rice development and of an abrupt rise in expendi.- tures. Spending requirements were up due to added capital commitments and the necessity for the Government to meet its guarantee of heavy obligations of a bankrupt quasi-government industrial organization. 2/ Measures were taken, how- ever, mainly through increased taxation and also through some cut in expenalture, so that the actual resort to the banks (less cash accumulation) was $420 million or not much more than in the preceding two years. 11. In the current year the accounts of the Government are expected to move closer to a balance. The need for borrowing from the banking system has been estimated at the record low for the last decade of only about $200 million and may well be even less. This situation largely reflects the full-year effect of revenue measures taken in 1959, together with some further tax increases adopted this year. As a result, total revenue may be greater than in 1959 by about $600 million or by about 10%. And this is after allowance for a probable shortfall in the budget estimate of income from rice export duties, due to the weak rice export market. Expenditures, on the other hand, have been budgeted at only about $300 million more than the actual 1959 level. Y Thailand's fiscal year is now the same as the calendar year. It is to be changed in 1961 to October-September. The National Economic Development Corporation. Ltd. (NEDCOL). 12 *> A -u - -ry o+I,th Governet-~rl~. OI q~fr1 w in billions of baht: Table 1 Government Finances 195h-1960 1954 1955 1956 1957 1958 1959 1960 Receipts 5.02 5.12 5.22 5.hh 5.62 6.06 6.68 Expenditures O Defense & Police 1.96 1.95 2.03 19h 1.83 1.0 -oUy Administration .66 .75 .86 .83 .80 .79 .88 Current Development 1.33 1.39 1.45 ]..0 1.60 1.6o .h Transfers & Miscel. .74 .64 .85 .87 1.01 1.36 1.41 Capital 1.17 .88 .74 .86 .84 .97 *93 Total Expenditure 5.86 5.61 5.92 5.90 6.09 6.66 6.95 Deficit .84 .49 .70 .46 .47 .60 .27 Note: These figures are preliminary and approximate since the Government accounts have not been closed for any years of this period. Indica:- tions are that there are large errors in the 1954 and 1956 figures and that the deficit in 1954 was around $100 million and in 1956 closer to 055 or 60 million. Expenditures financed by U.S. are not included. 13. The fairly close correspondence in the trends of growth of revenue and expenditure in the period 1955-1959 is evident in the above table. Average revenue growth was about h q year - somewhat less in the period 195h-56 due to changes in the pattern of export taxation and more in 1959 because of the added tax measures mentioned above. Ernediture rose by about the same amount during 1956-59 but the trend was less even, with most of the increase coming in 1956 and again in 1959. 1h. The largest enenditure increases have been in transfers (reflecting rising debt service and, in 1959 large budget rescue operations for floundering enter- nrises) and in recurring develoPnmnt oiitlays Most of the lntter have been on education and other social services. Defense and general administration expendi- trpnv. frm the budept h hen more or less st.neiv qine. 194 And this was also true of budgeted capital expenditures until 1959 when there was some in- crease due mainlv to rising apronrli+nn for +he Yanhn mnitinnrnnse nroient. The Government accounts shown above are for the Central Government only. They do not include: the accoun,ts of t-he vriio geyronmeint maecies no"r1do t.hey in. clude the substantial defense and public capital expenditure financed from ment agencies, including that financed by United States aid and IBRD loans, UIL-_'= Wj_ .V L1iL_L .U _L.;_d U U U).LU UU.P.LUU. V-&pr,;1U_UU_Lt: U LVVU-1 all" 1959 by about 25% (from about $1.8 billion to 02.2 or 2.3 billion). Most of this increase was made possible by a rising level of foreign financial assistance. - h - 15. Domestic borrowing by the Government other than from the central and conercial hnbanksInha ben a minor- iteim ofr 'hiirgotfinancningr Thep qmnint. of borrowing from the savings bank and the non-banking public has, however, relation to the size of the budget deficit. This improvement has been the public and, in the last two years, to closer governmental control over the borrowing from the Saving Bank and from private non-banking sources has in- creased fromIJ abutI. P)U IiL Loni _L9fo UU dULUL.LU P-11JU 11L±±±±0[I _L1 ±L77 1 continuation of the trend at anything like the rate indicated in these figures 15 un'i..*(ely, however, in view of the large part ol te improvement which is attributable to the shift in direction of Saving Bank investment rather than to more rapid accumulation of saving. The Balance of Payments 16. Since 193 Tnaliland has had a trade deficit in most years and a consistent deficit on current account. A summary of the current balance of payments during the last five years is as follows: Table 2 current Balance of Payments (million dollars) 1955 1956 1957 1958 1959 Exports 335 362 390 307 357 Imports 321 3 9 .5 385 42 Tra.eBaanc +1! .3 9 L.-79 -6 Invisibles, Net - 29 - 18 - 20 0 - 1 Balance, Goods and Services - 16 - 15 - 35 - 79 - 68 17. Despite these deficits, there was an increase in Thailand's foreign assets in each of the above years except 1958. The net annual inflow of IBRD and private U.S. bank loans, supplier credits, payments from Japan on obligations incurred during the war and a small amount of private direct investment has totalled about $15 million a year. More important, however, has been the sharply rising value of grants and loans under the U.S. program of economic and technical assistance - about $,12 million in 1955 and $50 million in 1959. The bulk of this $250 million program has been in the form of grants, of which about 60% has been for technical assistance and the foreign exchange component of 'defense support' proiects and about LO% in the form of non-proiect aid. used to finance commercial imports. The baht equivalent of non-project aid is deposited in a counterpart fund to be used to finance the domestic comnonent of U.S.-sponsored projects. With the exception of two Export-Import Bank loans totalling 5il5 million, U.S. Povernment loans, which have been Pranted by ICA and the Develonment Loan Fund to a total of $50 million, are repayable in baht or dollars at the option o.- the bo rrowe-r- 18. The loss of reserves in 1958 amounted to about $20 million and was due mainl,r to a sharp fall in exports attributable to a poor rice crop, a curtailment of tin exPnorts hv nhnit COm nnder the Tnt.ernational Tin Areement. and a drnn in ribber prices. Official reserves were about the same at the end of .1959 as at the end of 198 but thi was after a tran.qfer nf A8 million +.n the TMP in 199 tn meet Thailand's increased quota. Official holdings of exchange have been as Pf n1 v nwq_ Tahlp I (million dollars) 1955 1956 1957 1958 1959 305 322 327 309 310 19. This year another increase in reserves is expected. Export earnings should be larger than in 195, primarily as a result of still hgner ruber prices, as well as a substantial increase in the export quota for tin and a furtner rise in the minor export earnings. Net receipus uriuer foreign capital and grant financing are also expected to be larger. The import level has also been higher in the first quarter out it is unlikely that this year's import growth will be as large as the prospective increase ir. foreign receipts. 20. Exports - Thailand's export earnings have been around 1' to 20 of GNP in recent years. Rice, rubber and tin have been the traditional main- stays of the export trade but their relative importance has been changing significantly in the past decade as noted earlier. The main changes have been the declining importance of rice and tin and the rising importance of rubber and of various formerly minor exports (Table IX). 21. Comparing the averages of 1952-1954 and 1957-1959, rice remained about constant in export volume but declined in value by about 15%. Its relative importance in export earnings fell from about 60% to about h5%. Tin export volume in the two periods was also at about the same level but the average for 1957-1959 was a decline from the immediately preceding years and re- flected curtailed production under the International Tin Agreement. Tin export earnings were somewhat higher in 1957-59 than in 1952-54 but their relative importance in total exports declined slightly. 22. Rubber on the other hand, has risen very sharply in volume, value and relative importance. Rubber exports were about 100,000 tons valued at about 0850 million in 1952-1954. In 1957-1959 the comparable figures were about 150,000 tons and 1,700 million, the latter figure resulting from a consider- ably higher price level as well as the increased volume. In the former periods it was about 15% of exports: more recently it has been about 25%. 23. In 1952-54 Thailand's minor exports accounted for some 18% of total exports; in 1957-59 for 26%. This significant increase was due principally to teak. tapioca, maize. oil seeds. cattle. tobacco. egEs. hides and skins. exports of which rose from 7% of total exports to 15% while other minor exports merely retained on the average their relative position. The con- tribution of minor exports to earnings will probably not continue to rise as rapidly in the next five years as they have in the last five because further prospects for some items are not so favorable, such as teak and tobacco. For many other items, 'howe=vr, it. semsn likey + that thenupwardl trend will continue. This is especially true of agricultural items which cropping and which are in a favorable competitive position. 24. Imports - Thailand's import pattern is a relatively flexible one accounting only for about a quarter to a third of the total. The balance sumer items and manufactures and materials for capital purposes. 25. Imports are permitted practically without restriction although non- essentials are fairly heavily taxed. Because of this and the small pro- portion of essentials, the level of domestically financed imports is closely influenced by movements in money income. Fluctuations in imports conformed fairly closely with those in exports until 1953 and 1954 when import demand was swoolen beyond the export level by the inflated budget situation. They were again in line with export movements in 1955 and 1956 but subsequently have run ahead of exports as a result of substantially increased import financing from abroad. 26. Terms of Trade - Data are lacking for any precise calculation of Thailandrs terms of trade. In the earlier post-war period until 1952 or 1953 the movement was probably favorable as a result of sharply mounting rice prices and the effects of the Korean boom. Thereafter, there was a marked decline as prices of rice, rubber and tin fell sharply in 1953 and 1954 without any comparable drop in import prices. The less favorable terms probably continued until 1957. Since then the rice market has remained weak but present levels of tin and rubber prices, especially the latter, have undoubtedly improved Thailand's terms of trade in the last two years. HontajZDe-elonmnts 1955, Thailand's monetary situation has been fairly stable. The average in- 'JI .4~S 41 U.IU1 $'JIIC 0 t Jy 1100 _ V1U j') 0± VJ. IlLsI 100 La Ull 11 I £1 - outout, As noted, there was an increase in forei-n reserves in each year exceup -;,U, and the foreign exchange rate has been ialM. 28. in the pu-lic sector, much of the net governmenu -orro-ugnE±u.n unu*l in recent years has been offset in its moretar-y effects b accumulations of counterpart funds under the U.S. aid nrogram and by increases in miscellaneous liabilities of the central bank. And net credit expansion by the banks in the private sector has usually been moderate. 29. The exception to this pattern was in 1958. Although government borro7:-ng was reduced in that year, there was at the same time a large drawdown in the counternart funds and a marked increase in private bank credit. liost of the monetary impact was absorbed by a lrCe foreign deficit, however, end there was only a moderate increase in the money supply. 30. A summary of factors affecting the money supply in recent years is as follows: Table Het Changes in Factors Affecting the Money Supply, 1956 - 1959 (miullion baht) 1956 1957 1958 1959 I. Public Sector Borrowing from Monetary Authorities 426 67 317 4,388 Borrowing from Other Banks 61 35 87 164 Total. 77 9 0 Less: Government Deposits and Cash 110 33 18 180 Counterpart Funds 233 101 -78 76 Other Central Bank Liabilities 267 293 2hl 138 Net Public Sector -T123 9 _23 -7 HI. Net Eank Credit to Private Sector; 201 214 ou 6 1y III. Net Foreign Transactions 320 83 -390 138 IV. Coins, and Errors & Cmissions lU 8 V. Money Supply Changes 75 1 77 301 7 1/ Bank credit less saving deposits ana other non-deposit liabilities. Includes some loans and deposits of government agencies. 31. In late ly$7 the Government set an annual ceiling of $300 million on its net central bank borrowing in agreement with the IBRD at the time of the $66 million loan for the Yanhee multipurpose project. An exception was made to the ceiling for the year 1959 through prior consultation with the IBRD in view of unexpected financing requirements to fulfill the officially guaranteed obligations of the bankrupt National Economic Development Corporation. With the exception of 1958 the growth of counterpart funds, intended primarily to finance local currency expenditures on such U.S.-sponsored 'defense support' projects as e.g. highways, has been a significant offset to monetary expansion. These funds are generated principally as a counterpart to dollars provided by the ICA for its commercial import program. This year the situation may be reversed with the expected decrease in net borrowing from the central bank to well below the ceiling agreed being offset by prospective net drawings of some $100 million from these counterpart funds. 32. As noted, the commercial banks have not bpn a significnnt onurne of inflq- tion in recent years, except in 1958 when credit demands were increased mainly by adverse developments in the ernort t.a.n p iink anve, hoPve 1z ben relatively free from control, with little dependence on the Bank of Thailand, and therefore nble to act fairly independentlz of central mone+ary infnuence and direction. In view of this situation measures have recently been drafted to rovide for n1cd beenacte in the- +nea futu re. pn1 and are expected to be enacted in the near future. - 9 - TI. ECONOIO PROSPECTS Thp fPAnnrAl Chtinnk 33. It is reasonable to expect cont.inued arnt.h of t.ho Thai .nonnmy at a faster rate than population. In agriculture there is ample scope for expan- rion thrniab tho 4 i miiI iiq nf i mn"n-req nnm-mnia r+. nrcn nrl vr manc of i rri an- tion, better farming, and a wider range of crops and by planting of the large areas ofi suitable- ii"used 'Wnd on b0a+b, Ae o-P r r, ,~ i the r- -nn444n -+I, Development is already proceeding along many of these lines and this is re-- years, by the steady extension of the irrigated area, by the rising importance prod-ucuti an'u export of several formrl~y mlinor cl-opsul UYd by - e autauyctl extensive planting of new areas in the South with rubber, coconuts, fruits, tapioa, rice an other crops. Livestock raising is anoTner expanUing agle- cultural activity. The growth rate in agricultural output could be still higher but for slow progress in improving farming methods. This is particularly a problem in rice. There is a large potential for further rice expansion, and irrigation works now under construction or in prospect during the next several years should keep the trend of rice output at least up with domestic consunp- tion requirements and probably will allow for some small increase in the average rice surplus. But for the longer run irrigation will have to be complemented by more productive cultivation practices if the rice surplus is to be maintained. 34. In mining, Thailand's tin deposits are ample for maintaining or expanding output in accordance with market possibilities. Lignite production can be ex- pected to grow as requirements increase. There may be other mineral development opportunities if the commercial possibilities of iron and other deposits are established. Other lines of primary production are less promising. In forestry, a downward long-run trend in the output of teak is expected because of dwindling supplies. But production of most of the variety of other woods and forest pro- ducts will probably be maintained. Fisheries should be an expanding industry for the domestic market, although prospects for additional exports are not encouraging. 35. The sector of the economy that is undoubtedly exnanding fastest (although quantitative information on this is very scanty) is manufacturing. As noted, private manufacturing increased several times since 1950, and appears to be continuing to develop at a substantial rate. It is true, of course, that the role of manufacturing in the economy is still relatively small (only about 15%0 of national output) so that a fairly high rate of industrial expansion may still have only modest effects on tntal incnme. tvertheiss,+ neon hP littL question that private manufacturing activity has caught on - mostly in small establishments produning liht. indzsrial products for tn dotic market1 T+. should continue to develop and to increase steadily in relative economic im- nortnnnP. 36. Wih+hnprosect inprmyanseodr nAc+,rrdAth+afuhr probability of continuing private activity and investment in construction and coummerce and oecr oa4rroce aill 4- c,,-nc +n.a-n-l +-, ---,,n 4-1-+ +s- rising trend of output and of per capita income will continue. Whether there uTrs41 ifia Cnttnuoay. 4 wo- rth n-oti- ta - sP gaI. re made lynn. ~ ~ ~ _ UILU aJLO ±±o±atl ui a y:V V Un ICdLUt5 U.l CLIULLiu L4 U1 9/0 _Li, V_L course, difficult to say. It is worth noting that these past gains were made - 10 - in the face of a generally adverse movement in the terms of trade since 1953 as a result of sagging rice prices. On the other hand, this was also a period of sharply rising foreign aid, especially after 1954. From a balance of pay- ments standnoint. the increase in foreign aid probably offset the terms of trade losses. And from a budgetary standpoint the aid made possible priority public investmnent whinh othPrw-ie could not have been carried out. Further prospects for some of these factors and their influence on future growth - especially development nrinrities, P hq mhan fenr their financing and execu- tion, and the outlook for export income and the terms of trade - are con- qiciprp-din theh foillowaingp d1-icssion. pu,blic. Developn-ment. PrJm-rJ+tJ_ 3A7 *The Porhe"nFrm anv? r~nal st.nAnint, t.he ecnonmic "problemT arsall of Thailand is the Northeast. Here about a third of the population, concen- trat-Ing prt;marily on rice nutiai+L n- at rpr q+Irnr vroll 1-ip-Imir that for Thailand as a whole, largely because of an erratic and highly seasonal rai fan11- n +r~ 4, . J.L. In - ltem of. nUeLeA +1,14 ,C -- JAA - -I L A 1-p P-. .. "ny nl nIqir on development resources. The problem is that the natural endowment is not nities for advantageous investment in irrigation are limited. This situation tentialities which are now under investigation. Meanwhile there are some the Northeast. The most important of these are irrigation works (smaller proved agricultural services to encourage changes in cropping patterns and _Uf1.Pro_VUU falr technliques. 3o. Power - Thailand has been unusually poor in power capacity, even for an underdeveloped country. Measures are underway, however, which will remedy this situation in the Central Region, including Bangkok, and in the North. About half the population lives in these areas. The projects underway in- clude the multi-purpose Yanhee project, additional thermal capacity, and new distribution systems in Bangkok and other urban centers. Rural distribution facilities are also to be added to the program. 39. This program has been based on estimates of growth in power demand in the Bangkok area which may have been too low. The annual rate of increase in power consumption in this area in the past few years has been about 105 and would have been still higher but for lack of capacity. It is still some- what early to determine whether there is a case for acceleration of the present schedule for utilizing the Yanhee potential and for increasing the thermal power capacity in Bangkok. Further study may indicate that these are among the important development priorities during the next few years. hO. In regions outside the Yanhee project area public power capacity consists of diesel units providing power, mainly for domestic use, in small communities. Rates are very high. In the nature of the power resources and markets it is unlikely that this situation can be generally improved on a commercially prof- itable basis for a number of years. Part of Southern Thailand may, however, be an exception if lignite deposits there prove to be an economical source-of power. The area.possibly to be served is one of Thailand'-s most active. It includes the third largest city (Ban Hat Yai), most of the tin area, a large part of the - 11 - rubber area. and thp main centers of ruhbr nrnnessino and distribution. Technical studies of the lignite deposits are now underway and further studies of the market are alsn needed before +.ha jnt.ification of +.hi.q project can be established. 41. Transportation - Thailand's transportation needs are great and varied. Among the m impan+ y ae cr nn highw nre rements and -rqilTv imnn.- ments. 42. There are three kinds of pressing highway needs. The first is the elimina- seriously impede traffic or hamper economic growth. The second is the re- ofJ'iiU! d teei±U.c±at iLJV I'Ua±Ub LIt Llig L1LU Wjit,- mIn1 trunk~ ad.I ra-L systems. The third is construction of new major secondary roads in regions where development Is now constricted by lack of transportation. 43. iny o tne important neeas or tne first kina are oeing or probaoy wai be met under the U. S. aid program. 1/ Probable exceptions which should also have high priority in Thai Government plans are the improvement of the northern part of the main north-south trunk route (Tak-Chiengmai) and improvement and extension of the main highway running down the east side of the Gulf of Siamo 44. Probably the greatest needs of the second kind are in the Northeast where improved road facilities have already contributed to a substantial increase in agricultural production and could be expected to continue to do so. The import- ant requirements, additional to the further northern extension of the Northeast Highway, are probably the east-west laterals which now cross the Northeast and another north-south connection east of the Northeast Highway. 2/ 45. New route construction feeding the main trunk lines is a general need in many areas. The greatest economic benefits are probably to be realized during the next several years from feeders in the south which would open new agricul- tural lands and promising tin areas. 3/ 46. The importance of new railway investment arises from steady growth of freight traffic and from the need for greater railway efficiency necessitated by rising labor costs and by the shift of passengers and some of the more profit- able freight business to busses and trucks. Although the ton-kilometers of freight traffic has increased by more than 50% in the last five years, the per- centage increase in revenue from freight has been less than half that much. Passenger revenue has increased only slightly. And with increased operating costs, the net oDerating income of the railways has dropped by about a third. 1/ Including the continuations of the Northeast Highway from Saraburi to Banpkok in thp Snnth and from hakhrn Ratchanimq +. Tonc Thi(in the north and possibly also including major improvement between Bangkok and MAkhnn Pathom. the continuation of the En+ Ido.+ W tihwr tardn Muna KhMn Kaen and the main southern trunk from Chumphon to Nakhon Si Thammarat6 9/ Spec nifialy r-mIIdt lon Thnni Akho-nin Phaom,Udo TaI4 M--an T- Ban DhI Muang Rol Et, and Muang Sakon Nakhon - Maha Sarakham. Ngae-Knok Pho, Phangnga - Krabi, and Phatthalung - Ban Hat Yai. ME TANG Chiengmai N Op 1 _ M MR Ný •~Le iuang oe ng Khai Nakhon . NPhnom ST~e~\\ Mango onnan Lrnsn NORTH F j PHAO Ban Pha Sorokhon Cin y, Muang c AM BO80 ý A -1 1 n Si Rocha q, X/Chandhaburi &'Ranon~ Ban T.ku. a • an' B4 Nk hon Si Thammaroat TH AILAND TRANSPORT AND Pathalung Inn RIG ATIOin r O%v JFCT ~Phuket ++keExSTN RAILWAYS Bon Kanto- EXISTING HIGHWAY LINKS v's" Pp-ttani Bn Kl Ngoe Pho HIGHWAY PRIORITIES: U92 IBanSd Trunk innprovernents or additions ens~ ~ - Secondory improvements . • ••••••.. Secondary additions [!++++ + RAILWAY CUT-OFF UNDER CONSTRUCTION AI AVA IRRIGATION PROJECTS SEPTEMBER 1960 IBRD-726R MRE TANG._.- N ORE R N) S • Muan LoEl iNong Khai Nokhon m% Phanom •ANHEE Udon Thoni• ~ Mucng Lo NORTH Ban Phoi " ha Sorokhon KAMPHAENG~Ro-ett f PH~Tao uang (T & :nnroinar [ ciaMm (Khorat) A SaraM PHRA Ba4.-n Si Rocho q) Chanl uri cnIf- ,h n n k : B.n T.k,. P-r• N hn h tl uTHAILAND TRANSPORT AND ...... EXISTING RAILWAYS Kontangý Songkla EXISTING HIGHWAY LINKS Ban Kh g,3 HIGHWAY PRIORITIES:radion em .. .... Seocondor y improveme nts ........... Secondor, addit.ons ++ ++0 ++0++++ R AIL WAY CUT -OF F UNDE R CON ST RUC TION Ae IRRIGATION PROJECTS AUGUST 1960 IBRD-726 - 19 - t7. The railwv.i i ct comleting m fiv-vpan imnrnvement Pnrnrarn. much of the benefit from which remains to be realized. A further program of improve- men*'ts _Js no, fW, y..rp0 -1 +'kJ.. 4- ^^+ n UJW"i o ^f' nn-nS? - h on iu. substitution of diesel for steam locomotives, 1/ the improvement of track, bridges as oone ULLqr Vkk ik+-l +b border), an increase in rolling stock, and the expansion and modernization of J~i~. ~1I .JLa yd U 0VjJ:.U.0__LY atL J)CU18ron an )anI iid- LIdU .LCZ-Lo 4U. ruru tnevelopment 2_5 not a ngn priority au presen buL o aY vUme so if means can be found through investment in river and tidal training works to reduce tMe high rate oi siltation and consequent heavy dredging requrements in the Port of Bangkok. Studies are also proposed to determine whether or not wtere is a priority case for an alternative deep water port to serve the BangoA area. Finally it is expected that jet planes and growing air traffic will neces- sitate expanded facilities for Bangkok, either at the present airport or at a new location. 49. Irrigation - Additional irrigation works are of high priority not only in the Northeast but in other rice growing areas as well where better water con- trol is probably basic to higher yields, multiple cropping and other improve- ments. Potentialities for further irrigation are large but the state of project preparation and construction capacity limits the scope for large new works at present. The most urgent immediate irrigation job is completion of the large Chao Phya - Yanhee system in the Central Plain. Other early possibilities of importance are the projects in the Northeast, previously mentioned, and another small river project in the North (the Me Tang). Preparations should be under- way, however, for a start in about three years on two large and promising central projects (the 4ae Klang and Kamphaeng Phet) which may have irrigation possibili- ties for more than a million acres, and on smaller river and tank projects in the Northeast in addition to those already studied, It may also be possible in a few more years to start work on a major Mekong River project to benefit a substantial area in the Northeast. And there may be the further possibility in the not too distant future of a large project on the Nan River in the North to provide additional flood protection and water regulation in the Central Plain and to irrigate an extensive area in the northern part of the plain. 50. 11nicipal Facilities - Water, sanitation, transport and other municipal services are poor in most Thai urban centers. The problem of gross inadequacy of such services is probably most acute in Bangkok because of the spiraling needs of a population which has doubled in the last ten years. Improvements are underway on the Bangkok power situation, considerable road work has recently been done and further work is planned to relieve transport eonm 'estion. But a great many transport needs for the Bangkok area are still to be faced and very little has been done about other services of which the most seriniv indeauate are the city water system for supplying both commercial and domestic uses, hous- ing and sewerage. 51. Economic Services - AlonL with the above-mPntioned and other nbhk.ipq1 in- vestment requirements, there are also public service needs, especially in agriculture. the chqrq.ter of which will be of significano in infliencing Thni- land's development. Perhaps the most important of these in affecting productivity are th anri orwur elv.Pnicin orsie ordnbyafonestr ofcilts fr p in demands for wood fuel which is considered by forestry officials as excessive in +.r%n+ for-t resource an'-~' -d sound forestrymitnne ..-,-.~~~~ ~ 'L~ US. ..L.;%t~ o- th use of -[pove rube _r~eUes and, as, th--- ~hI i p administering a rubber replanting program; improved agricultural credit arrange- productive, although just as important for Thailand's longer run development, )C. A rapidu increas inzt expendiJ_LUtre on1 urrnvt l economi sevis wldbe difficult because of personnel and administrative limitations. Present facili- ties for pub.lic guidance and assistance to prVat agiutrUadidsr are quite limited, Some steps at improvement are being taken but they are not as yet impressive. These Inadequacies, unless correcued, may become iucrelw- ingly significant as drags on economic growth, especially in agriculture in the longer run as further development comes to depend increasingly on improveu methods and diversification. 53. Personnel and organizational capacities also limit the scope for public investment in physical assets. But here, within existing capacities, there are larger possibilities for early expansion of activity, given the necessary financing. Proposals for an increase by a third in road building activity of the highway department within two years may be too ambitious but some more moderate rate of increase should be technically feasible, Maintenance, canal building and smaller dam construction work in irrigation could be stepped up in the short run with more funds. On the railway, proposed further investnents are of a kind which the railway organization has been carrying out in recent years and are quite within the organization's capacities. Power could absorb a larger amount of capital than presently programmed if this should prove ec- onomically justified. And reasonable financial outlays for municipal works could be well beyond recent levels of expenditure. And in the social servi'ces the trend of expenditures is sharply upward, especially on education which rose by about 50% in the last few years. It is important, therefore with respect to Thailand's future rates of growth to consider the fiscal outlook and pros- pects for financing additional public expenditure on development. Prospects for Development Financing 54. As noted earlier, the Government deficit has been sharply Pared over the last several years and by now the budget is nearly in balance. Despite this currently favorable fiscal position, however, the problem of financing of a substantial further increase in economic development activity may be a difIicult one. 55. The importance of rising U.S. aid in meeting the cost of increasing Dublic development activity in recent years has been previously noted. Indeed, the increase in such assistance for public investment between 195 and 1959 was of about the same order as the increase in total investment expenditure of the Government and Government qponcies. The rnnortion of +thM +.otal financed from U.S. grants and loans increased from about 10% in 1955 to probably about a third in 1959. The heavy Anenne of Thaiilnde pulic inveTme+nt.nn eontined TT:, assistance is, therefore, apparent. It is, of course, difficult to forecast the future trend of such assistance t+.may be reasonable, in vie of the close relations between Thailand and the U.S., to expect aid to continue at something like the present level But there apparst be li++ basheis for asnming that it would follow the rising trend of recent years. Further expansion of public investment expenditure is therefore likely to depend on financing available from other sources. 56. With regard to domestic sources, the prospect for expanded public invest- mnnt. finanning al.q annn 1iffimilt. Thprp are other non-investment demands on the budget which are rising and which will have to be met to some degree. has been pointed out, and this is likely to continue in view of rapid population gr wt a d thLLI -1J+ - 4±J. T- --4 4f'~'A .L tt4 . -r. .L4* '1SZ-m I..JS " '1 M 1 n n nrnhn1- - - IT ni q to be expected in administration and defense expenditure which have been held Tnn,-afvb n o~ Sn~r4-a.,4. n 1O ''-'les C, V14 .LbJ %.4±3 US .Llj.tO 1) f L)u J U 1, 11101CJLJ. U1 1 UI.~L L, PCUL L, V.L WIZ. PJ.LJJU.LMIL VL 0k0%,P .L1 1 J UP--~'' economic development may arise on the revenue side. Most of the revenue sources for additional taxation. Revenue is probably now around 13 or 14% of GNP. Some JLnu1rkU UAdzj uuU±i Ue ±xucre1a1ieu witouio uuecoming uiuly regressivul uld revenue from direct taxation could be raised substantially, not only through higher rates but more importantly through reduced evasion of both personal and company Iniume taxes and elimination of unwarranted exemptions. Direct tax administration is, however, poor. Improvements are urgently needed and steps in this direction are now being planned. But substantial revenue results will take time and it seems likely that the gains in this direction will be gradual. >o, MearWhile, there is the mounting prospect that a reduction in export taxes on rice may become necessary and that the consequent loss of revenue may offset a substantial part of the gains in other revenue through normal growth, added taxes and better administration. Export taxes on rice now produce $800-0900 million or about 13% of total revenue. With the trend toward a buyers' rice market in the last few years, a high proportion of the drop in world prices for Thai rice has been passed back to the rice farmer. Export prices in the first half of this year were 10% or more below last year's level and about 20% below the average for the last three years. The relative effect on farm prices has been considerably greater - apparently a drop of a quarter to a third. As a result the Thai officials are concerned not only about the possibility of consequent rural dissatisfaction but also that at the current farm price of around $600 or less per ton of paddy (around 4O% of the export price) there is neither adequate incentive nor means to increase productivity. Although rice prices increased some 10% in late August - September, prospects for permanent improvement are not promising, and officials feel they may have no alternative but to reduce substantially the rice export taxes. 59. If an adjustment of this kind were to be made, it would probably be made aradually over four or five years in order to avoid a sudden upward effect on consumer prices of rice in Thailand. Assuming this, reasonable prospects for public revenue as a whole would be a 2 or 3% average annual increase instead of a 4 or 5% rate which might otherwise be probable. 60. In these circumstances there is the possibility of difficult revenue nrobnems in the now+. few vers nnri rrnqsnnPnt unertainty abniut the extent to which Thailand will be able to finance increased expenditures on economic de- velpennky fro domsicres a reign Its, treforelopme ncurposes seem unlikely to increase and may decline. It may, therefore, be necessary to - 15 - resource in any substantial exnansion of nublic exnenditure on economic development. The Balance of Payments Outlook 61. Prospects appear favorable for a rising volume of Thai exports during the concerned may be offset by a decline in prices of some of the important exports. or 15%. But the export price outlook beyond 1960 or 1961 is sufficiently un- $400 million before 1964 or 1965. 62. A brief review of the outlook for the main components of Thai exports is as follows:- Rice - Exqports this year will probably equal the estimated surplus of 1.3 million tons. It is to be expected that for the next several years the surplus can be maintained at about this level or silgnl.y higher while meeting additional annual domestic requirements of around 80,000 tons of rice. This has been the pattern of the last decade and it should continue for some time on the basis of current irrigation work and improved seed programs together with some continuing extension of the area. The situation in the longer run, say the late 60's or early 70's, is less certain. There is little question or Thailandts potential for continuing to maintain or further increase its rice surplus in the foreseeable future despite rapid population growth. Realization of this will, however, depend to a greater extent than in the past on improvement in yields. And this is likely to require improved irrigation and extension services and better incentives for the rice farmer than exist at present. Incentives may be improved by means of a reduction in export duties. But there is also the need to improve public services to assist the rice farmer in expanding produc- tion. It should be possible at least to achieve the 20% increase in production over the next decade which would be necessary to meet rising consumption requirements and still maintain or perhaps increase somewhat the surplus. Rubber - Volume has been rising rapidly, especially in the last three years. In the absence of adequate data it is difficult to forecast future levels of production but extensive areas of immature rubber and substantial new olantine indicate that output and exports will continue to increase. Prices, however, seem unlikely to stay at anything like present levels as technical advances in synthetic rubber production narrow the technical differences between synthetic and natural rubber. A decline in natural prices to the synthetic level by the late 1960's would more than offset the increase in rubber volume and reduce earn- inos nomnmred with this vpqr- On the other hani_ the tarnings should stay well above the level of 1958 and preceding years. Tin - A gradual increase in volume of exports and fairly steady prices not.+ far. below1 thej +-~ esn lee sem a reaonal+1rt TTnPr+..qji1n.V about the duration of reserves appears unwarranted with the prospect thaati as deoitiona poduct Island ndd suppinland ope maintained by additional production from offshore and mainland operations. - 16 - Teak - Reduced supplies will probably reduce earnings belo~w present levels by 1965 and thereafter. Other Exports - The value of total miscellaneous exports has been incre'asing. -~ .avrag '~rf'r,ate ofC almot, d 1 fl1 a yern. 'The imponnrtt increases in the five years 1955-1959 were in maize (four times), (doubled), eggs (six times), tobacco (four times),cotton seed (seven time.Ii/ WhIilethes inrae were~ th most spectacular, there -wa a substantial expansion in the export of a long list of other items. This trend is continuing again this y-ear and is expected to go on in the future. Assuming a somewhat slower rate of expansion than in the past, an increase in the miscellaneous exports by $20 or '25 million over the present $100 million level should be feasible by about 1965. Invisibles - Tourist income has been increasing rapidly and may well rise at an even faster rate in the future. The limiting factor on the pace appears to be hotel accommodations. Taking invisibles as a whole, it seems reasonable to expect an increase from $35 - 40 million at present to $50 or $55 million by 1965 and another substantial in- crease in the subsequent five years. 63. In line with the preceding discussion of exchange earnings prospects, it may be assumed that Thailand's current foreign income would increase to around Wo50 or $460 million by 1965. This compares with $395 million in 1959 and possibly as much as $425 million this year. The percentage increase, 1959 to 1965, would be about 15%. 64. This would be a slower rate of growth than during the last five years when current exchange earnings increased 20 to 25%. Furthermore, the difference in the trend of exchange availability would be even greater if, as is assuned, there is no further increase in U. S. aid above current levels. Taking exchange from current earnings and U. S. aid together, the increase between 1954 and 1959 was almost a third. Imports were thus able to expand at a comparable rate with- out balance of payments difficulties, 65. Considering the influence of foreign trade in Thailand's economy, it is reasonable to expect that slower growth in exports and imports would also mean slower growth in the economy as a whole. It is improbable, however, that a reduced rate of expansion in trade activity of the magnitude indicated would have serious adverse effects on economic growth, Even if rates could not be maintained at the recent 4 - 1 average. economic growth should still exceed population growth by a significant amount. III. CREDITWJORTHINESS 66. Thailand's external public debt at the end of 1959 amounted to $145 ril'lion of whliCh $11115 Mil1-liOn. was- -IOng t&U .-LM (a-bo0ut4-$'o ~1-1 411; -Pvm TAPfl' and the balance suppliers' credits or private loans of five years or less. r1ure~ re e t-'-U nU t 11 e S piu i~ -p --±-L'U -'Q L't:U -L U U. 1? - fI I -L L. VI I II~ a CI s - rt.-k- construction of an oil refinery. Taking this into account, the total present -3$%r, - n,- 1 n-/ - -2 -1 -1 L4 - 8-1V 1 ., 4-114 l, - -1. debt was *PL) lillion on Play io, nyou ana W1J1 amouno UU tLLc mi±-4- v u end of this year. 67. Thailand undertook at the time of the Yanhee loan from the IBRD (September 1957) to keep its official external obligations within the then existing level of about $150 million except as agreed in prior consultations with the Bank. Two exceptions were subsequently made, amounting to about $15 mililon which raised the debt above the $150 million figure. But repayments have since re- duced the total again to about the September 1957 level. It will decline to about $100 million by 1965 and to :$60 million by 1970. 68. Thailand's debt record has been a good one except for some delays in recent years in payments due on supplier credit installments of government agencies or which were guaranteed by the Government (NEDCOL). These delays resulted from the problem of finding budgetary resources to meet obligations which arose unexpectedly. The necessary funds were found in all cases and full service is now current and being maintained on all direct and guaranteed obligations. 69. The service on present external public debt (including the recent supplier credit obligations) will amount this year to $17.5 million, will decline to about $15 million in 1965 and to about $10 million by 1970. The ratio of service at these levels to 1959 current exchange earnings would be 4.5% this year, 3.8% in 1965. and less than 3% in 1970. On the assumption of exchange earnings at $450 million in 1965, the ratio of service on present debt in that year wouldbe just over TI. 70. Obviously 1h service of nrp.qpnt dht iq not a diffinult burden for Thailand and could be increased. There is, of course, always the possibility of severe dips in exchange earnings as a result of seriously adverse weather and crol conditions. Past variations have, however, rarely been of such critical magni- tude and the ri.qk in hqonming n-rnarP..iv l%r1-r 1 s Thqi1nni.q izmnorts are diversified. Furthermore, with near self-sufficiency in foodstuffs and with essential onnqm oo annA + mlyn n onrv- +. n third of +ntal imports, Thail.nr1 has a flexible import pattern which tends to adjust to the availability of ex- change auh adjustment hbeen facilitatd by liberal imnort and ehange policies and by relatively stable fiscal and monetary policies. Judging by ample cushion for temporary exchange deficits in the present foreign exchange reswra,r-, l, C i,,r14-a fn, 4.-na , equO4 a-oe ove of 1, th nurn4- 4 ----.v+ -1 -ir1l 71. From a balance of' payments standApoint . ,ntherefore.,.,e4 a ubtn+Jals ,n in external debt would be possible within Thailand's debt servicing capacity. IMe C.,IIII L .L%'C Ui ~,.k~dULI~.P1.UULt:;I1Itly LiuCL laul U LPVJ.L UCLIU LL, .LIIL1" ULUV1 W,,. foreign borrowing for sound purposes than creditworthiness. Nevertheless, the praticav;e oxAnIwn U! ±uvenomenu, on publc uevelopmnu prUOr--1 muz y equire more financing than could be supplied domestically. It appears appropriate, therefore, for TIaland to supplement domestic resources for uevelopment with loans from abroad. STATTqTTCAT. APP7NTTY List of Tables Table No. I. Thailand - External Public Debt Outstanding (including ment Guaranteed Debt and Debt of Political Subdivisions II. Estimated Interest and Amortization on External Public 1960 III. Gross Domestic Product at Constant Prices IV. Agriculture, Contribution to GDP (1956 prices) V. Production of Principal Crops and Forestry Products VI. Central Government Accounts VII. Central Government Revenues VIII. Holdings of Internal Government Debt IX. Value of Exports by Principal Commodities X. Volume of Principal Exports XI. Value of Imports by Major Category XII. Balance of Payments (1954-1959) m_- n a m T rrn mY 'mhu T n YTIT 1 n.nm n mTTMemAMT'%a1 1f /f 'T.TTTunhTri T7i,n Iat10le -L. 1r1IJTkA0VD - TAUIijrUD.j-LL' JzD. UU1C)11\1-i1U k~1.L.UU.1VU Ui DISBURSED) AS OF JULY 31, 1960 National and Government Guaranteed Debt and Debt of Political Subdivisions (In thousands of U.S. dollar eouivalents) Page 1 Item Debt as of July 31, 1960 TOTAL EXTERNAL PUBLIC DEBT 1 2g511 Direct government debt 38,638 $18.000.000 IBRD loan to Kingdom of Thailand. h%. 1950-1971 13,856 $1.071.40 Export-Imnort Bank loan to Kingdom of Thailand, 31%, 1951-1968 504 . 2-)40n300 Siam Sterling Conversion loqn, ),1936-6h 1.7q1 '5,924,000 Fuji Car Manufacturing Co. to inistry of Tn+.rp-r 0h-19A1 /a 790 F 451,786 C. Melehers & Co. to Ministry of Defense / 756 4.07-n-o viii rn-n r Manet.noi n MTJniz+try of Defense 1960-1967 l7,00 ), nn nnr Ti:T,n io a Ton-"loAA 9-A "3,0003000 IBRD loan 3F 1950-1966 1,614 Guaranteed debt of government corporations 111,246 to ) r)r A A TrM-1 - 1,- '1-- ). f/A9 I O C O7nI 1 1 f 212,694 Edison Swan Electric Co. to Provincial L-eIriiato Org. L nfd Lf.Ui -1 n" /- ).77,± Z 207,413 Associated British Oil Eng. to Provincial T"- .- ,- '- -I. rnr' -I nf- f 102,571 Associated British Oil Eng. to Provincial -l f'N.. .02 .t -T.. - t1rr' t -Z - it/- rLectri1icatLO-1 urg / -oU U U. f 450,853 Associated British Oil Eng. to Provincial 8 363,375 General Electric Co. to the Telephone Org. X' Ml- - - -1 --U3 -1) nrQ - n 01 liLua Laliuj ,;) /y a -?V7 $1h,000,000 Export-Import Bank loan to Yanhee Elec- tricity Auth., L, 195o-193 14,Vu $3,000,000 Bank of America to Provincial Electrifi- cation Org. 45o, 19>6-190 >8 $3,400,000 IBRD port loan 4fo, 1956-1971 2,889 Woo,uuu,uuu aiRD electricity loan >--70, 1t-yo oouuu $10,000,000 Bank of America to NEDCO 41%, 1954-1963 6,000 J7,095,000 Ce. de Fives ille to iNEDUCO, 1955-1962 3,903 $12,432,000 Cie. de Fives Lille to NEDCO, 1956-1963 6,340 Guaranteed debt of private corporations 1,491 Z 1,u93,uuu Stork Werkspoor to Sugar industry Co., 1954-1961 1,041 42,266,612 Fried, Krupp & Rheinhausen to Jalaprathan Cement Co., 71%, 1955-1960 362 IM 336,000 General Electric Co. to Thai Rediffusion Co. 7%, 1957-1960 'a 88 See footnote at end of table. Table 1: THAILAND - EXTERNAL PUBLIC DEBT OUTSTANDING (INCLUDING UN- DISBURSED) AS OF JULY 31, 1960 (cONT.) National and Government Guaranteed Debt and Debt of Political Subdivisions (In thousands of U.S. dollar equivalents) Page 2 Item as o.u July 31, 1960 Municipal debt 1.136 t 714,130 General Electric Co. to the Municipality of Bangkok. 1957-1963 1,136 a This obligation is guaranteed by Thailand only as to transfer. IBRD - Economic Staff September 16, 1960 M11-TT External Public Debt Outstanding (Including Undisbursed) / -- - C' -- -I 1 ft^%. \RS 03. 44LLy .5, LYUI (millions of U.S. dollars) Total Direct Government Debt Gov. Guar. & Mun. Debt vustanding Payments Outstanding Fayments Outstanding Payments Jan. 1 During Year Jan. 1 During Year Jan. 1 During Year 1960 /a 153 18 39 4 114 4 1- , - .LyoJ IM7 14 37 4 110 10 1962 136 12 34 3 102 9 1963 126 16 32 6 94 10 1964 113 15 26 6 87 9 196 103 15 20 6 83 9 1966 93 14 15 5 78 9 1967 83 14 9 5 74 9 1968 73 10 5 2 68 8 1969 67 10 4 2 63 8 1970 60 10 2 2 58 8 1971 53 8 1 1 52 7 1972 48 7 - - 48 7 1973 44 7 - - 44 7 1974 39 6 - - 39 6 /a Amounts outstanding for 1960 are asof July 31. 1960: oa7nents shown for that year are for the full year 1960. Table A! Gross Domestic Product at Constant Prices (Billion baht, 1956 prices) Industry of Origin 1952 1953 1954 1955 1956 1957/a 1958/a Agriculture, forestry and fishing 15.5 15.4 17.2 16.1 17.3 19.3 17.9 Mining 0.6 0.6 0.6 0.7 0.7 0.7 0.6 Manufacturing 4.2 4.5 4.6 5.3 5.3 5.4 5.6 Construction 0.9 1.0 1.0 1.2 1.4 1.9 1.7 Transport, coTummication and utili- ties 1.5 1B 2.0 2.2 2.3 2.5 2.L Wholesale and retail trade 5.5 5.5 6.3 8.1 8.0 7.8 7.5 Public administration and defense 2.5 2.9 2.4 32 2.5 2.4 2.5 Other services 3.4 4l 4.2 4.5 4.4 6.2 4-. Gross domestic product 34.2 35.8 38.3 41.3 41.9 44.2 42.3 Index 82 85 91 99 100 106 101 /a Estimates are preliminary, based on partial data, Source: National Income Office, Office of the National Economic Development Table IV Agriculture, Contribution to GDP (1956 prices) (Millions of baht) 1952 1953 1954 195 1956 1957 19!8 Crops 11,040 10,602 12,314 10,740 12,728 13,795 12,353 Livestock 1,334 1,555 1,491 2,043 1,417/a 1,988 1,740 Forestry 1,337 1,54 1,580 1,501 1,312 1,557 1,308 Fish 1.781 1.79h 1.828 1.863 1.898 1,93h 1,970 Total 1.92 15.405 17.213 16.147 17,355 19,274 17,871 Index 90 89 99 93 100 112 103 /a This dron is nrobably ann t- rrors in the rAw data which. especially for livestock, appear inadequate. Source: National Income Office, NEDB. Table V Production of Principal Crops and Forestry Products (Thousand metric tons or cubic meters) Commodity 1950 1952 1954 1956 1957 19 8 Rice (paddy) 6,684 7,325 8,239 7,234 8,297 5,568 Rubber /a 115 100 120 137 136 .146 Fruits - 2,221 1,993 2,069 2,108 2,147 Vegetables - 691 717 745 759 773 Copra 105 126 207 239 238 209 Tobacco (green leaf) 21 L2 53 58 66 69 Maize (unshelled) 27 45 62 115 137 231 /a Kenaf 5 13 8 17 21 30 Cotton 20 24 23 32 37 35 Sugar cane 839 1,476 2.L37 3.830 4,147 4,309 Groundnuts (unshelled) 63 76 92 101 118 121 Chillis - 38 39 L1 22 24 Cassava (roots) - - - - 418 487 Teak 245 261 359 200 188 181 Teng and rune - h29 303 253 28h 305 Yang 213 253 291 340 380 418 Firewood 1.619 1.20 1A1) 1 01 1m20h 1-123 Charcoal 620 609 665 571 505 603 anhon (millinn stAm. q 38 h3 LA 3 56 Lac (tons) /a - 616 14 11 5 Index - 84 96 100 108 101 ,A Bsdo xotfgrs Table VIT (Billions of baht) 195k 1955 1956 1957 1958 1959 1960 .U,S Ue Expenaitures Defense and police 1.96 1.95 2.03 1.94 1,83 1.86 1.89 Civil administration .66 .75 .86 .03 .00 .79 .00 Recurring development 1.33 1.39 1.65 1.40 1.60 1.68 1.84 Public debt service .08 .15 .1b .24 .29 .32 .24 Other transfers and misc. .66 .46 .67 .63 .72 1.04 1,17 Capital expenditures 1.17 .bb .74 .b6 .84 .97 .93 Total expenditures 5.86 5.61 5.92 5.90 6.o9 6.66 6.95 Receipts 5.02 5.12 5.22 5.bb 5.62 6,06 6.68 Deficit .84 .49 .70 .46 .47 .60 .27 Financing Non-expansionary .11 .17 .07 .09 ,08 ,18 Savings Bank ) ^ Non-banking public ) ,uy .±_ .uy 0 .Ot O IBRD .02 .02 - - - - Other Foreign Borrowing - - .02 - - - Exoansionary .89 .32 .51 .37 .h0 .L2 Monetary authorities bb .40 .50 .42 .30 .52 Corercial banks - - - - .01 .06 Use of cash .03 -.08 .01 -.05 .09 -.16 Frrors ne deisr ts in - .ud a s - .. V. vJ OUL4 *i47 * (U 94UL *4( OUWJI VIU a Cu±t- a.ujuou.; U~ U Ia) %.octoli UCOL adU e;, UW. d tre andLI U for net debits 3r credits in t IutuTnds and si1cir accounts. "LXDendi- t..±u ~n~d Y U.S. aru Inot included. Table VII Central Government Revenues (Billion baht) 1954 1955 1956 1957 1958 1959 1960 (Est.) Income Taxes .24 .28 32 .3h .36 .38 .49 Individual .1 .17 .19 .20 .24 .27 .37 Corporation .10 .11 .13 •14 .12 .11 .12 Business Taxes .34 .43 .hh .45 .52 .63 .72 Export and Similar Taxes 105 -93 1.42 1.43 1.25 1.30 1.38 Rice .82 .59 .98 1.03 .94 .88 .84 Rubber .06 .14 20 .16 .13 .26 .35 Tin and Other 1inerals .04 .06 409 09 o5 .o5 .09 Teak and Other Wood .09 .10 .10 .11 .12 .09 .10 Other Exports .04 .04 .05 .04 .01 .02 - Import Taxes 1.14 1.30 1.41 1.49 1.61 1.80 2.07 Other Indirect Taxes .74 .69 .80 .81 .99 489 .95 Education and Health Stamp Tax .12 .13 .13 .13 .13 -1I .14 Total Tax Revenue 3.63 3.76 4.52 4.65 4.81 5.14 5.75 Other Revenue .39/a .97/a .70 .68 .81 .92 .4 Total Revenue 5.02 4.?3 5.22 5.33 5.62 6.06 6.59 index, Tax Revenlue 80 83 100 103 1o6 114 127 Index, Total Revenue .96 91 100 102 108 116 126 ta ineludes official profits on exchange transactions. Note: Differences in these figures and those in Table Vi are due to adjustments in the latter to a cash basis and to allow for net credits in trust funds and si-miar accounts. Table VIII (KLllions of baht) 1956 1957 1958 1959 1959 1960 n 4- 1 . DJL' CjenLtra.l Bankul Bonds 1,671 1,927 2,078 2,052 2,256 1,945 Treasu-r bills 3,163 3,198 3,215 3,22 3,23, Overdraft 970 1, 250 1,412 1,737 1,284 1,l55 B.O.T. Treasury deposits 560 413 hoL 598 ', 03 Total 6,36 9 109 9 3B2 7 , Commercial Banks Bonds 143 156 20h 29h Treasury bills 95 80 44 17 Total3b 0 236 _2L. 311 Savings Bank Bonds 57 125 169 268 !ion-banking Pub-Ic Bonds 222 257 295 375 Treasury bills 9 8 6 6 Total 231 ~~~67 ~3N -3b1 Total 6,890 7,14 7,327 8,589 Tnhlea TY (Millions of balit) 1952 1953 1954 1955 1956 1957 1958 1959 riajo 'J--Lk-PO.t-s Rice 3,870 3,820 3,086 3,133 2,867 3,636 2,968 2,530 RLUbber 900u 67D 9-37( -"o I,8 1,523. -L,U-u 0 ,32 2,33 Tin 410 365 373 441 507 531 255 434 Sub-total 5,180 4,860 4,397 5,376 4,897 5,577 4,549 5,300 Other Exports Live cattle - 1 h()1 79 48 q9 120 Eggs - - 11 29 57 62 69 71 Maize 28 h7 CA An oA 7) 183 Ph Tapioca 28 38 60 57 98 138 178 19- Casto.nr bAns 51 52q ' 36 63 87 .9 77 Hides and skins 5 30 53 68 48 54 47 71 T__k 07 1 1 911 DA. in), s 9o 9)h Lac 43 78 157 214 147 81 43 74 U WIV.L± %WUUPU. LQ exports 451 517 907 826 933 910 808 873 Sub-total: other exports 703 896 1,537 1,635 1,825 1,726 1,644 1,973 Total: Domestic exports 5,883 5,756 5,934 7,011 6,722 7,307 6,193 7,273 Adjustments Re-exports 68 78 71 111 207 248 254 302 Shipments to diplo- matic missions - - - - - - 74 - 34 - 26 Other /a + 32 - 34 + 17 + 38 + 553 + 586 - - Exports, f.o.b. 5,983 5,800 6,022 7,160 7,82 8,067 6,413 7,549 Index 80 77 80 96 100 108 86 101 /a Made on the basis of exchange records. The larger adjustments in 1956 and 1957 are believed mainly attributable to substantial customs undervaluation of rice and rubber exports in those years. volw Tabn leWX-.L.tc (Thousands of metric tons) 1952 1953 1954 1955 1956 1957 1958 1959 1960/a volume Rice 1,548 1,359 1,002 1,248 1,226 1,570 1,133 1,098 1,200 Ribber 99 101 -119 132 136' 136 136" 176 170 Tin /b 13 14 14 16 18 18 9 14 19 Live cattle /c - 1 9 24 43 32 54 106 - Eggs /d - - 1 3 6 8 7 8 - Maize 25 35 37 68 82 64 163 237 - Tapioca 30 44 55 56 77 79 125 150 - Castor beans 19 21 1-4 14 22 26 16 35 18 Hides and skins - 3 5 6 6 6 6 8 - Teak /e 59 68 79 88 78 78 72 74 73 Lac ad lac seed/f 6 12 16 17 14 11 5 12 - /a Estimated. b Tin concentrates c Head /d Per 1,000. 7e 1,000 cu. meters. /f Tons Table XI Value of Inýports by, 1-ijcr- CateLgory (Miioins of b3ht) 1952 1953 1954 1955 1956 1957 1958 1959 1. Food and Tobacco 829 767 772 620 ..059 _.2 Produets of which: 90 milk produets (164) (227) (306) (294) (21) (380) (332) (h07) tobacco (77) (103) (93) (13h) (147) (183) (179) (156) 2. Crude Materials 82 81 8 70 74 3 70 3. Mineral Fuels and Lubricants 420 472 570 692 775 928 901 945 of which: gasoline (154) (158) (222) (259) (302) (353) (350) (358) fuel & diesel oils(103) (1i7) (162) (228) (263) (323) (337) (3h2) 4. Animual C: kegetable Oils C Fats 18 2h 27 28 28 19 25 31 5. Cheriicals 9- -3-3 26~ ~5i-7 7~63h~ -5E 7- 3~ of vhich: medici- nal & y-harmiac. (109) (1h0) (230) (213) (249) (268) (263) (314) 6. Nanufncture P-oods _ 2692 .29133 32th 3677 3530 36.i0 333 357_ of which: paper, papertd (57) (12)i) (150) (158) (169) (292) (213) (228) textiles, clothing and footw'ear (1078) (1035) (131) (1230) (276) (1158) (1050) (1197) structural iron & steel product.s (2h6) (332) (38) (329) (131) (505) (h33) (LL,6) iron & steel rails, pipe and 11 ro( (22) (8,7) (91) (78) (138)ý (16) (2291) (23 simple metal räfg. (238) (340) (324) (30h) (291) (370) (328) (299) 7 -.T ichry. & EquiDmt. 345 525 523 44L 533 632 713 1091 & Equipmt. 152 280 330 342 353 392 381 398 --- . .- - -- - of Thich: autos, jaotorcyc-l-es, hicy7cles, etc. (171) (273) (254) (322) (349) (383) (329) (206) buses, trucks, lorries, chassis (185) (169) (162) (159) (176) (250) (254) (36h) 10. i,,liscellaneous Transactions 76 491 380 246 283 318 209 233 of which: gold bullion (31) (h51) (344) (213) . (93) (106) (22) - 11. Total Lmports 5524 6471 7021 7503 7655 8537 8237 C842 Tahl YTT PnlInno rf P_ymrnt. (,1z 1QlQ0 (Millions of U.S. dollars) .L>',4 _Ly. ? _L )U _L7.? -L7-U -L7 Receipts Merchandise exports f.o.b. -o 08 o y5u nt. Foreign travel 2 3 3 3 4 5 n Transportation and insurance 2 3 4 0 Investment income 1 3 4 6 6 5 Government 2 7 o 10 i2 13 Other services 1 7 8 9 8 8 Sub-total: goods and services 291 359 388 h26 348 395 Donations, (excl. US grants) 1 4 3 3 4 6 Total: Receipts 292 363 391 429 352 400 Expenditures Merchandise imports c.i.f. 312 321 358 405 386 424 Non-monetary gold 17 11 4 5 1 - Foreign travt1 8 10 11 10 9 Transportation, insurance 6 6 6 9 6 5 Tnvestment 4nome 3 8 12 1F8 13 11 Government 4 10 6 5 3 4 O+her e-rl. ie 11 A 9 8 8 Sub-total: goods and services 353 375 1404 1461 427 162 Donations, private 0 12 11 11 4 2 Total: Expenditures 361 387 415 172 130 658 Receipts - Expenditures - 69 - 24 - 24 - 43 - 78 - 64 Capital and U.S. Grants Private capital - 2 3 3 5 11 Settlement with Japan - 3 3 3 3 3 U.S. Loans and grants 6 12 30 35 21 C0 Other official borrowing IBRD 1 2 3 7 4 21 Foreign bank loans - 10 - 3 - - 3 Supplier credits and other - 4 4 6 6 - 5 Banking system, net 21 - 27 - 15 - 9 18 - 14 Monetary gold 1 1 - - - 8 Errors and Omissions 41 17 - 3 - 5 22 2 Total 69 24 24 43 78 64