Thailand - Current economic position and prospects

R E S T R l C T l- D Report No. -FE -2 5a This renort was orenaired for use within the Bank and tht- Associatin ]t May n åt be published nor may it be quoted as representing their views. The organizations ncep -rr^nfn^ -r a--n^ons i[ 1.fy fo4-r thek a ^'r' r-^- v ^r -r^-mI a-.c~c 'n' the c n e fh h report. INTERNATIONAL BANK FOR RECONSTRUCTiON AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION il. TTU1VI~~T' r inUMhA WnCrC!TM'TnIV AND PROSPEjv.TS OF THAILAND July 19, 1962 Department of Operations Far East CURRENCY EQUIVALENTS One Thai baht = U.S. $0. 048 One dollar = 1%21 One million baht = U. S. $48. 000 One million dollars = 1421, 000, 000 ghapte Page No. Basic Data ........................ Summary and Conclusions...................... i I. Recent Ecmnomic Developments................. 1 Trends in Output and Investments... ee**** 1 Trade and Balance of Payments.............. Government Finance......................... 4 Mo4ney and Prices ........................... 7 II. Economic Prospects.......,.................. 9 Outlook for 1962......................* 9 Longer-run Prospects...............e...... 9 Agric:ulture........,........ ......... 9 Forestry andMining,.................... 11 Manufacturing.,...........00009..... . . . 11 Foreign Exchange Prospects.............. 11 Public Development Requirements..........., 14 III. Creditworthiness............................. 16 lk - Thailand Major Irrigation Projects STATISTICAL APPENDIX (for List of Tables see next page) STATISTICAL APPENDIX Table No. I. External Public Debt Outstanding Including Undisbursed as January 1 to March 31, 1962 TT Vs - -4- --. n----..L ~ .L T)-.I" A J.. J U±Wma,nU Vu11wacUUUUJ 0evJA", Iayin Uo xvat ruvU.. Debt Outstanding Including Undisbursed as of 1 n4 - . ?)-- - n - - A -1-3- - - 'I Decemuer 31, u wUh1 Major reported uuiU.Luone tnuary to March 31, 1962 .L.e U-UOu 1'JU.LUi1a.L rrouuc , L-.yu IV, Indices of Agricultural Forestry and Fishery Production V Production of Principal Crops and Forestry Products VI. Volume of Principal Exports 1777- TT- - . I_ n *1 * - - 1 vII. Value of Exports by Principal Commodities VIII. Value of Imports by Major Category IA. Dalance of Payments, 197-1961 X. Central Government Accounts (Cash Basis) 1958-1961 XI. Central Government Revenues, 195-lyoJ./62 XII. Holdings of Internal Government Debt (end of year) XIII. Changes in Factors Affecting the Money Supply, 1957-1961 BASTC, MATA Lrea: s1/qu0arne kIrInDmet-res Annual rate of growth: 2.8% GNP (1960): 50.2 billion products 10% Tin 6%o Machinery and transport Other 37o equip. 23%0 Other 55% Government Financial Transactions (1960 actual) (billions of baht) Receipts 6.79 Expenditures 6.76 Surplus 0.03 Internal Public Debt (December 31, 1961): $7.03 billion or $334.8 million equivalent External Public Debt: payable in foreign currency (March 31, 1962) $227.6 million equivalent Total $562.4 million equivalent Official Gold and Foreign Exchange Holdings (ecember 31, 1961): $47 million equivalent the past decade the economy has probably grown at an average 5% a year,, with substantial gains in agricultuffaa rouuUUVI "Ut; mIIL UVny with an industrial sector which, though small, is expanding rapidly in relative importance in the economy. Export production has been fairly dynamIc in - direction of a more varied pattern of primary products with a lesser dependence on rice, and this in combination with substantial foreign assistancmeand con servative financial policies has contributed to a favorable payments and exchaigo. position and a strong currency, Gains in output have been sufficient for a rising level of average par capita income in spite of rapid population growth, and the potential for continued growth is considerable. Regional development has, however, been uneven. Rapid and substantial progress has taken place in the Bangkok area and to a Lesser ex- tent in the South and also in the Central Plain and in the North. Tne North Ea jt region, where a third of the population is located, has been lagging behind the rest of the country, with very low living standards and income per capita well below the modest $100 national average. Much of the growth in Thailand's output can be attributed to private initiative, not only in industrial and service activities but in the diversifica- tion of agriculture as well. Rice production, the traditional mainstay of the economy, has not increased very much but there has been a large expansion of rubber and of other crops which used to be of only minor importance. Public investment has, of course, contributed to development, especially through trans- portation, irrigation and power programs. However, the private role in develop- ment has over-shadowed that of the Government largely because of limitations of public development capacity. These limitations have been most evident in the last two years when, largely as a result of especially favorable export circumstances, the resources were available for a considerable expansion of public development expenditure. Performance could not rise, however, as quickly as appropriations and as a result the Government accumulated large cash surpluses and foreign assets increased by almost as much as the inflow of official external financing. For the future the export outlook is much less favorable than in the oast and this may have a dampening effect on growth trends unless government development efforts are greater and more effective - especially in the fields of irrigation and other services to agriculture, in more rapid improvement of transportation deficiencies, and in assistance and facilities for private in- dustrial development. Official aims in these directions are high and appear excessive in relation to capacities, but a less ambitious public investment expansion by ierhaps 50% over five years does not seem an unreasonable expectation. Financing of this, at a time of probably lagging export growth rates, is likely to require a larger domestic revenue effort as well as continuing official external assist- ance at about recent levels of around $60 million a year. - ii - Thailand could afford to borrow much of this on conventional terms in view of the fairly moderate service burden of present external debt. At this level of external financing requirements, however, there are also reasonable grounds for some assistance on special terms in view of Thailand's probable continuing dependence on net capital inflows for a long time if recent rates of economic growth are to be maintained. CURRENT ECONDMIC POSITION AND PROSPECTS OF THAILAND I. Recent Developments Trends in Output and Investment 1. The real growth of the Thai economy appears to have continued in 16u at about 57 - tne average rate for the past decade - and was probably somewhat more than this in 1961 as a result of better-than- average agricultural conditions. With population growth at a rate of 2.870, the annual gain in per capita output has been 2% or more. Per capita GNP is around the $100 level. 2. Gross investment has been estimated in recent years at 15 to 16%0 of GNP - about two-thirds or more private and the balance public - and it is probable that the ratios were similar in 1960 and 1961. Public sector investments have been concentrated on transport and communications, agri- culture (irrigation), power, and education and welfare. Private invest- ment has been mainly in commercial and residential construction, transpor- tation, manufacturing and land development. 3. The trend towards greater diversification of the economy continued with non-agricultural sectors increasing their share of GNP. A rate of growth of around 8% was achieved in manufacturing and handicrafts and even higher rates in transportation. construction and power. The combined share of these sectors rose from 23% to 27% of total output between 1952 and 1960. Total agricultural production increased at a rate of nearly L% per year. Within the agriculture sector the relative importance of rice declined, rubber increased, and n varietv nf miscellaneous noricultural nrndunts mae rapid progress, their contribution to exports becoming an increasingly imnortant item in thp baln nf nnyments 4.Procluntinn e)f rinp (paddriv t.hp. tradHitional maqinsqtay- of thep o-nonrr was just over 7 million tons in 1958/59 and 1959/60 and rose to 7.5 million in 1960/61. The 1961/62 cron is estimated mt ahrut thp. snm. lvel Much of the increase of the last two years was attributable to favorable weather conditions. The long run trpnd of rine nnr tion has been only sightly upward. 5. The production of rubber, the second most important export com- mnHdity,g increased= in the) Fiftiesaan" average= rate of arud er; in 1960 production leveled off at around 170,000 tons, but rose to about 19A;nnn tnn.. J n I10A A. A ltho"gh total pgricuct'on -1-ncras- -6 (1 year during the 1950's, the growth in output of miscellaneous crops averaged - -11t 155OL -4 the ~ i 4 - .---- Jsi U lllt.U.F U.L LVU.L-Y:t ;s I IullWy uaj:. have been substantially higher than this average. In addition to very large gaCns O maize, kenaf, Unu tapioca, substantial increases occurred in ground- nuts, sugar cane and cotton. The expansion of livestock and poultry products continued. - 2 - 7. Following the increasesin the quotas under the International Tin Agreement in 1960 and their subsequent lifting, the production of tin in 1961 was again up to the peak of 18,000 tons reached in 1956 and 1957. Lignite production, most of which is consumed by thermal power plants in Bangkok, was started in 1957 and, since 1958, has been fairly stable at slightly more than 100,000 tons per year. Another power plant recently commissioned in Bangkok is expected to consume an additional 100,000 tons. Trade and Balance of Payments 8. Since the early 1950's Thailand's export earnings have fluctu- ated widely from year to year but appear to have increased on the average at about the same rate as GNP, or about 5% per year. (Appendix Table VII). Imports have fluctuated less than exports. Their rate of increase was somewhat faster than exports during the decade of the 1950's but they have fallen behind the rapid rate of export expansion during the last three years. In most years Thailand has had a trade deficit. 9. The fluctuations in ex)orts have been due both to weather which affected production and to changing world market conditions. The most serious slump in recent years occurred in 1958 when export earnings fell by nearly 2n% because of a poor rice crop, a sharp decline in rubber prices and a curtailment of tin shioments by 50% under the International Tin Agreement. Since then export earnings have increased rapidly. They re- covered in 1959 to almost the l957 neak qnd subseouentlv rose by 11% in 1960 and by another 17% in 1961. These recent gains have been largely the resuflt of exnnndina xpr voliirnp. I.it.h -m-rnn+ -f' -,'ces of~ Jn-; 4A, --1 exports being more or less compensating. 10. Rice shipments, which had averaged 1.25 million tons during 1955-60, inmnpd in 1Q1 n over 1 . million tns n aar ilt+ - Pofavrable havreats and markets, Rubber exports in 1961 were also at an all-time peak, nearly between 1959 and 1961 with world market improvements and removal of re- .q .ri r- +. i n n2 Anl -xrn-n iwa ^-+ko nPn'~ -r-'+c - 11,. 411~+n ,, live cattle and eggs, continued their very rapid rate of expansion. In 25% higher than in 1960 and nearly double the 1956-1958 average. 11. The developments of the last decade have resulted in some notable changes in the composition of exports. Among the unree main exporus - rice, rubber, and tin - the contribution of rice to total export earnings has dropped from about two-tlrus in 1954 and 1953 to 30-3570 in 1960 and 1961. This decline was due largely to the fall of about 30% in rice prices wnicn took place during O');-V990 On the other hand the snare of rubber rose during the same period from about 15% of total earnings to 20-25% as a result of substantial increases in both volume (from 100,000 tons to 185,000 tons) and the export price. The contribution of tin, after a fall in 1958, recovered to about 670 in the last two years which was approximately - 3 - the same as in 1952/53. Despite the increase in rubber, the share of the th _Zajrepot rie ube tin) take together d]eclined__ from about 85% of export earnings in 1952/53 to some 65% in 1960/61, and the contribution of the 0ormer minor exporUs shoUwu a correspondig in- crease from about 15% to 35%. 12. There have also been significant changes in the composition of imports resulting from average increases of more than 10% per year in capital goods, fuels and raw materials and less than 4% in consumer goods. The following summary indicates the change in composition between 1952 and 1960. Imnorts by Main Category. 1952 and 1960 (percentage distribution) 1952 960 Consumer Goods 69 55 Capital Goods 17 23 Fuel 8 11 Raw iaterials & Miscellaneous 6 11 Total 100 100 13. Thailand usually has a balance of payments deficit on current account but this shifted to a small surplus in 1961 because of the reduced trade deficit and an improving invisibles account. The main improvements under invisibles in recent years have been a decline in private transfer payments, and increases in receipts from official foreign establishments in Thailand. from tourism and from earnings on rising foreign exchange holdings. As indicated in the following table, the current account has improved steadily since 1958. This was especially the case in 1960 and 1961, due to the much larger jump in exports than in imports and a con- seouent marked reduction in the trade deficit. Current Balance of Payments 1957-61 (millions of dollars) 1957 1958 njc 1960 1961 Exports 390 307 357 408 474 Tmn-rt. 110 386 A21, 450 484 Trade Balance -20 -79 -67 -,2 -10 Tnvisible. net -26 -1 +3 +11 *23 Balance, Goods and S e r V i c es -46 _o -()A -3 +1 3 14. In Most year net inflows of c-Aitl and of-ficiaol gnts_ we-rck somewhat larger than the current account deficit, and official foreign 1958. Such increases were small in most years but rose to large figures - 4 - in 1960 and 1961. Among the important sources of such inflows have been U.v. UO;)Unce, ±D"an Uo1,jy pri-vaue us *. UvUIM _oal, suppliers creait s and payments by Japan on wartime obligations (see Statistical Appendix M 11 V\ A . whIh I Lue A). An in.l-Ow o privaTe capital, whicn rose from arouna Oj m1tilon per year in the 1955-57 period to an estimated $1&million in 1961, has become increasingly important. However, the largest source has been U.S. grants and loans which rose to a peak of about $45 million in 1959, of which $36 million was in grants and $9 million in loans. In 1960 and 1961 net official borrowing increased further but this was more than offset by a decline in grants; total gross receipts from U.S. grants and loans declined to $44 million in 1960 and an estimated $26 million in 1961. 15.. Thailand's official reserves have developed as follows over the .Last several years: Thailand's Official Foreign Assets (end of year) (millions of dollars) 1955 1956 1957 1958 1959 1960 1961 305 322 327 309 310 360 417 16. The level of official reserves at the end of 1961 was equivalent to more than 10 months' imports; one year earlier they were equivalent to over nine months' imports. There has been a further substantial rise in the first quarter of 1962. The increase in official foreign assets equaled official borrowing and erants in 1960 and was considerblv bqrper in 1961. 17. As noted, the improvement in the balance of payments in 1960 and 1961 was the result of the 30% inn in exnorts in the two years which nn- 1, ~~- - - -----_- ------------------ -- _ Siderably outdistanced the rate of growth in imports. The slower import Dace is nnrtlv nttrihutnh1P to the lna ho ho PrnP+or I.i b 11 a sharp export increase. But it also reflects internal fiscal and monetary con- straints as discussed below, Government FinAnoe lA. ThaIland has generally followed fairly cnservrativre fiscal poli- cies. A notable exception was in 1953 and 1954 when inflationary finance was-r----------------- a~ Q1h+n+o cn a A'L sim4. o4i-Jo heate to arise again in 1959 as a result of a scheduled increase in expenditures rice crop. Inflation was avoided, however, through measures to increase 7 . lue general fiscal picure i ±UU - anu 01 was one 0f a marke' increase in revenue by much more than total expenditure. The result was a shift from a cash dueicit with some expansionary financing in 199 to an approximate balance in 1960 and a substantial surplus with a large -5- public absorption of money in January-September 1961.1/ The government accounts s,ince. 195A nrp qnTnnriPr nr1dit.innl r1P+.i1s n-r in Appendix Table XI. Central Government Receipts and Exenditure (billions of baht) 1958 1959 1960 1961 1961/62 U an. -li PJj U* Ug U Expenditure 6.09 6.70 6.76 5.48 8.11 Dece-p sj'J U.UU) U.17 ) ~ 20. Capital expenditure included in the above figures has risen from X840 million in 1958 to just under $1000 million in 1959 and 1960 and probably also in 1961 as a wnole. This, however, represents only part of total capital outlay in the public sector since the budget excludes central government investment financed from foreign grants and loans and there are also additional capital outlays of government enterprises and local agencies which are met from their own resources as well as transfers from the central budget and some foreign borrowing. Details of recent total capital outlays in the public sector are not available but they have probably increased in the last five years from 1,600 million to around 02,000 million. The latter is twice or more the capital figures in the central government accounts. Balance of payments data indicate that net official borrowing and grants from abroad has been recently equivalent to perhaps 40 or 50% of total public investment. 21. Neither 1960 nor 1961 were exceptions to the usual fiscal record in Thailand of actual expenditure being below, and actual revenue in excess of budgeted levels. In 1960, however, the budget itself was conservatively drawn in reaction to the fiscal difficulties of 1959. Provision for ad- ditional expenditure was slight and some major categories of appropriations were reduced including defense and police, education and health, and trans- port and communications. Revenue reflected not only the upswing in exports and other activity but also measures which adjusted income and profit tax schedules, raised some business taxes and began an improvement in tax administration. There was also stricter control over disbursement and the use of funds of public financial institutions. 22. In 1961. on the other hand. the fiscal surplus was less a matter of deliberate policy than of inability to gear up quickly to a substantial increase in appropriations. Exoenditures were budgeted qt qn qnnuql rqte 12% higher than the actual 1960 level with allowance for significant in- creases in mnst -,nPn8inrr Paegris, p.ninl1v n~n vv,mrrincqoinl nnr economic development and on public investment. The latter was budgeted 1/ In 1961 the fiscal year was changed from January-December to October-- 2/ Money analysis data indicate a cash surplus of about 250 million. - 6 - at an annual rate nearly 50% above the 1960 level. In the event, however, spending fell far short of the total with an actual increase of only 3% instead of 12%. Much of the under-spending was in the capital budget. Meanwhile revenue continued to rise by 8% so that the accounts for January- September 1961 wound up with a 0210 million surplus instead of the budgeted deficit of $510 million. This surplus compares with an apnroximately balanced position in 1960 and a large deficit of $640 million in 1959. 23. Along with this shift from a deficit to a surplus there was also a verv large iurnn in the snlps mf onvPrnmRnt RAn1rijtjf tM thP StAf SavinOR Bank and to sources outside the banking system. This favorable market for government paper was unrinuht.erIlyi e%n TjnfPQ+a+jen of theonraedlqi ty of the economy associated with the accumulation of reserves. It also ated accumulation of deposits in the State Savings Bank in recent years. The incrase= In no-epnsonr pulcorwng(nldigte aIg Bank) was from $180 million in 1959 to $330 million in 1960 and to over -_ - JJ U.J LL-L U ll W"Y-JVJ Vi? UUVI. L7%JJe I L.LDl, Lin comi na±LtionU w.U11 the near balance of expenditures and receipts in 1960 and the surplus in transactions to the extent of about 0375 million in 1960 and about $530 mia±uon a ne first nine months o 170±. inese figures were equivalent to about 4% of the money supply in 1960 and 5% in 1961. The contractionary inluence of the public sector as a whole was even much larger. 24. For the current fiscal year the Government has budgeted expenditures (exclusive of refinancing of public debt obligations) at $8,110 million and revenue at P7,420 million for a deficit of A690 million. This excludes appropriations carried over from the preceding fiscal year, but on the other hand there will be some carry forward of 1961/62 appropriations so that the cash deficit indicated by the budget is probably about $700 million. Non- inflationary financing resources are estimated at about $400 million (excluding refinancing) and borrowing from the central bank is budgeted at about U300 million. 25. Cash appropriations are about $1,000 million higher than the annual rate of actual expenditures in 1961. Larger outlays are provided for in most categories but the main increases are in current spending for economic development and social services and for capital expenditure. 26. Whether the expansionary monetary effect of the budget will actually be as much as 0300, or about 3% of the money supply, remains to be seen. Receipts may again be somewhat underestimated, and while substantial in- creases may be realized in current and capital spending they will probably still fall somewhat short of the budgeted level. Hence, while fiscal oper- ations are not likely again to be deflationary as in 1961, it seems probable that they will be fairly neutral or only mildly expansive in their monetary and payment effects. -7- foney and Prices 27. Following the reduction in government deficit financing from the 1953/54 levels, the monetary situation was fairly stable until 1960 with the money supply increasing at about 5% to 6% per year, or only slightly faster than GNP. Expansion of gross bank credit in recent years ranged between 10 and 15% of the money supply with total gross lending to the private sector larger than to the Government, and much larger after al- lowance for various offsets: accumulation of counterpart funds and cash balances in the public sector and in the private sector, time and saving deposits and other commercial bank liabilities. Private borrowing fluctu- ated mainly with crops and foreign trade; borrowing by the public sector varied more widely with changes in budget deficits and in the rate of ac- cumulation of counterpart funds and government deposits. Whereas private borrowing continued in 1960 and 1961, borrowing by the public sector de- creased sharply and large cash balances accumulated. Altogether, the net effect of the domestic sector upon the money supply, significant until 1959. was about neutral in 1960 and sharply contractionary in 1961. Foreign exchange reserves increased in most years and as alreadv noted the growth was exceptionally large in 1960 and 1961. As a result of those factors, the money sunnvl rose hv 120 in 1960 Fnd by 5 during the first nine months of 1961, well in excess of GNP growth in 1960 and presumably also in the full year 196I 2)A Tf an inflaionTr monPnnet qiysition devouPs1n. in Thailnd,1 'It. is- generally reflected after some time lag in an increase in imports rather than. a rise in. the price le-el1, although there m._-.%1 of' Iic0uOe 1k +amrYn-m price increases pending the arrival of sufficient imports. Moreover, is likely to be quickly reflected in a change in the price indexes, since LAJ U11 I WI)V LC,0 _C J1 LUC; _1iUt;_&. CIU Ql U VZ) U VU! _L _ 1ir,A C; 111:;?V.LLJ weighted by food. 29. The price level was quite stable from 1955 to 1960, except for 1958. deTt 41-L1_ _ n, .___ _ --__- I JCf\ .Lu unau yuar, thpLe une rather small increase in money supply k4/0, lu price indexes increased when the supply of rice and other foodstuffs was tighteneu by a poor harvest. With the recovery of rice production price sta- bility was restored in 1959 and maintained until 1961, when the price level again moved upward. This was probably due to both monetary factors and the food supply situation. Thus the effects of the fairly rapid increase in money supply during 1960 and 1961 have not yet had time to be fully compen- sated by increased imports. Secondly, with the increase in rice exports during 1961, milled rice in Thailand was reported in, short supply in the period just before the new paddy crops was harvested in the latter part of the year, and the rice price rose considerably, Recent price trends are indicated below: Pr4^ icenxes (1953=100) 1957 1958 1959 1260 1961 Annual Averages Wholesale prices 118 123 115 113 123 Cost of living 118 125 119 118 126 - 8 - Changes in Factors Affecting the honey Supply, 1957 - 1961 (millions of baht) 1957 1958 1959 1960 1961 Domestic factors: Gross borrowing Public sector 490 400 658 352 162 Privptp qPntor (D_ 18 756 1 101 1.112 Of fsets -889 -.26$ -833 -1015 ~ -1,869 Q Net domestic factors 207 683 581 138 -595 ForeiFn transactions 153 -390 -43 892 1,064 'loney. J. up lY C. J JLns1118 Do U U-'J %annual inres 6 12 ioney supply as : of GN? 19 U9 19 20 20 a/ january - September / Details in A'ppendix I, Table XIII c/ of which: 1960 1961 Government deposits & cash 602 833 Other Central Bank Liabilities 171 86 Private Time & Savings Deposits 457 45 Counterpart Funds l 52 Other Commercial Bank Liabilities 71 hb_ 1,315 1,869 -C)- II. Economic Prospects Outlook for 1962 30. Economic proaress in Thailand should continue to be satisfactory in 1962. The export boom has continued in the first quarter of the year with further large rice shipments at increased prices and with continuine favorable world prices for rubber and tin. Imports have not yet caught up to this ex- Dort pace and there has thus been a further increase in reserves. nossiblv boosted to some extent by short-term capital inflows. 31. For 1962 as a whole, however, it seems likely that the recent rapid export ernansion will taner off. Rice exnort earnings will probably not be much if at all above 1961 with higher prices about offset by an estimated 10%. rediActin in nvAilnhilities. Tin nni rnbber volume mav be somewhat larger although price prospects are uncertain and could well be lower in the course of the ver- Othr Pnort iname houlri innrPqe hut. probhblv not by as much as the large expansion which took place in 1960 and 1.961. 32. Meanwhile imports should rise, probably by more than exports unless the flqn;l it.intion i. anain Aeflntionary which seeis unlikely on the basis of the 1961/62 budget forecasts. Return to the normal trade deficit and a lpelina r-ff in fPnrpicn mn q.c i.- thrPforP nrohnh1e in the remainder of the year. 33. Growth in national output in 1962 may be less than last year when favorable harve+ raised agricultural nroAet.inn ahove recent trends. How- ever, private activity is reportedly continuing to expand and another 4 or 5% T Prspc _;4* IttIi em rcasonau.Le Uo assue U11clu Vl -1..-d ~JVJSV ~t to grow at a. rate ahead of population with a continued gradual change in the structure uf the -coom reuheu _Lu IUpano.u _ot_ se uuoza cuu r V ~ L,L UO uujie 0± UIiU UUUIiOII,Y .LU0 U_LU_LLt L.L111 t--1_JCi0_LV1i V0± Ui 1IL U.JdL UJ. c.U a considerably faster pace than agriculture. However, as indicated in the ± O±±UIV*L11 U± 0 ).± 1i, UJAC.Le ar.±e a. iIiU ± 0 1)a±1~ ±1 UV and it is likely to take greater financial, technical and administrative X Rgriculture - _ue a UnU11u-LUtau povenu: Ju iU.uC.L .o-LVu agricultural production through improvements in yields, greater diversifica- bLuin anu some expanion 01 Ulle cultivateu area. 11griculuUuIC vuPU) Zo 1UUK earlier, has grown over the last decade at about h% a year and it should be posi_ue uo main ua_in u_LZa caue u gUi± U1on y7UV -Z c _L7 I V'u0 . UWUVUI u -1 is likely to require more extensive and more effective public development acUviVy n agriult iurnethan past. Witu this thee oa us 4-A t agricultural growth may taper off. 36. A major factor in past agricultural gains has been, as previously indicateU, a fairly spectacular expansion ofavaiuy of minor fam pueua as well as a substantial increase in rubber output. On the other hand, rice - 10 - which is by far the most important single crop has contributed little to the expansion of the economy except during unusually favorable crop and market conditions as in 1960/61 and 1961/62. 37. For the future, a continued rise in the output of minor crops and livestock products may be expected although it seems doubtful that the recent high rates of growth will continue. In contrast, rubber prospects are uncertain because of the unfavorable outlook for world rubber prices. Rice prospects are also uncertain and depend on the extent and effective- ness of irrigation works together with other measures to improve yields. 38. The prospects for rubber are far from clear. There is a large potential for further increases in production both from planting high-- yielding material on newly opened rubber land and from replanting of over- age rubber with high-yielding trees. However, recent technological advances in the synthetic rubber industry have made the price prospects for natural rubber gloomy, Since the quality of the soils on much of this land is low, it appears doubtful that the search for alternative uses will produce large scale possibilities more attractive than the planting of high-yielding rubber material. Actually, planting of new land and some replanting will probably take place on a voluntary basis as it has in the past. Unless a much better alternative is discovered, the Government should support this effort to the extent of ensuring that such planting and replanting is done with high-yielding materials, Such support should not, however, be carried to the point that it would be a financial burden which would preclude other higher priority projects in the public sector, such as irrigation. 39, These uncertainties emphasize the need to boost rice production at a faster rate and to entinue tha nronn of diverqifiration as ranidly as possible. There is a large potential for increasing rice output and, with the irriantion rnoiPnts now under cnnstruction or mant it be starteA it should be possible during the next few years to increase rice production recent levels. For the longer-run, effective execution of major irrigation works and morn prndnntivA cnltivation prctices nuld nrbably ePand ni certainly maintain the rice surplus. This will require, however, greater %Ittentir~~n t~ the wate oto aspects of _..igatioz. projects adasrne and expanded public agricultural service. Improved government services to the farmer are lSO easentian1 to enco.iul+agal diversication. and extension programs points to the urgency cf an early start in strengthen- i +0^11"in-al service to th fame ,A 4 I~~ , results may begin to materialize more quickly than is generally the case to demonstrated crop and market opportunities. - 11 - 4i. Forestry and Mining - In forestry, the output of teak is expected to LL _.11t-, r,1 CtUUCLL_L VVtl U11t J_U11,-1 .L1 CtO UL L 0 V -&r-l_ I*.~ -'. I the production of most other types of timber and forest products should be maLnanedk at. aroun recen ± -Lve-JO tin deposits for expanding output as rapidly as market conditions will permit. rroduciLon 01 lignite oUULd alou Ise aO requiemVtO increaCO ArIA there are likely to be opportunities to expand output of iron ore and other minerals once tne neceSSary Survey and exploration have uen carrieu ut. L3. Manufacturing - Manufacturing production is estmated to have racrea=u at an annual rate of 8o or so in the last decade and probably more in recent years. As a result the contrioution of this sector to urI sueneu ±rum ±ee than 12% in 1952 to nearly 15% in 1960. Most of this has been light manufactur- ing for the domestic market In small and medium sized plants. Less Man oU percent of the establishments employed more than 50 workers in 1957 but larger units have become more numerous during the last few years. 44. Prospects are good for continuing expansion of Light manul acuuig. There appears to be a growing interest in and increasing managerial talent for private industrial ventures. This has been stimulated in recenu years by risug income levels, especially in the Bangkok area, improvement of over-head facil- ities and by government policies including the policy of leaving new iduStrua. development largely to private enterprise and liberal tax treatment, import duty exemptions and protective measures for new industrial nvestment. An institu- tion has also been established to provide long-term credit and technical and managerial assistance to private industry, altnough as yet u lco Ou 0-1. particularly active and its contribution to industrial development is so far unimpressive. L5. witn more active tecnnical and fiuancialssis anue an" a"- -- public help in such forms as industrial estate development, it should be reason- able to expect manufacturing to grow even more rapiudly in the 1960 utan u rn the last decade. h6. Foreign Exchange Prospects - Export and other exchange earnings may be roughly projected five years hence au auoul UV1 ma±-U%L.-u oum w U63 million in 1960 and $"h5 million in 1961. A summary table of this projec- tion and some discussion of the consideration involved is as folows: - 12 - Projection of Foreign Exchange Earnings Actual Projection 1955 1959 1960 1961 1966 Rice volume mil. T 1.2 1.1 1.2 1.6 1.3 unit value per T 123 110 103 loy 110 value $ mil. 148 121 123 172 145 Rubber volume mil. T 133 176 170 185 210 unit value USO@ lb. 28 28 33 25 18 value mil. 84 ill 123 100 85 Tin volume thous.T 16 l 17 18 20 unit value 6 per T 1,300 1,500 1,50) 1,700 1,500 value 4P mil. 21 21 26 30 30 Teak value mil. 13 12 17 12 10 Subtotal mil. 266 265 258 31 270 Other exports mil. 59 95 120 160 220 Total mil. 325 357 408 474 490 Invisible receipts (pross)al 34 43 54 70 85 Grand Total 359 oo 463 544 575 T Including private donations. h7. Rice exports are forecast for the mid-1960's at only slightly more than the average of the Iqte 1950ts and 1960 and less than in the favorable harvest years of 1961 and 1962. Some expansion of rice production may be expected but, as during the 19"0's. the trend for the next few vears is not likely to be much more than enough to keep up with the growth in domestic consumption requirements. A fairly steadv price level for rice seems a reasonable assumDtion for the next several years. H8. Rubber production is projected at an annual rate of increase of about o5 an thp basis of nrobable istinp n1antings of immature rubber which will be coming into bearing during the next several years. Some of this gain may be offRPt hv rPnfPmnt of over-na trees with nmw immatorP rbihbPr under a re- cently inaugurated Government replanting program. This program is likely, how- ever, t o gain 1 mome ntui m ny slow c Imly a%nnd rl probably i nnhot MezsiYnifiJc%nt factr-n in output for the next five years or so. Adverse rubber price movements are rubber with qualities similar to natural, and the price conservatively assumed here for the mid-1960s, taking acccunt o average grades of Thai rubber, is U3$0.18 per lb. or about 70% of the 1961 level. - 13 - h9, Tin exports should continue to increase in line with world demand in vie ofavilaledeposis on thie mainland -n offshor Ahich sh ould offset- diminishing reserves on Phuket Island. An annual rate of increase of 2% is therefore ass,,med. it iS a13o aSSumed that +J -,-rs -JI et.rtle ack r,- their recently increased levels to about the 1959-1960 average. Teak felling has been diminishing for several years but exports have beeo~yr hn maintae ftrronn -I,, q___n A-crl-_ P , r yrnv ryw 4-1nl ,rn.,+ therefore probable over the next few years. 91 Other exports - The volume of other exports has been increasing very 1Jct'- vJ U1 CCU 0L V~d Vi t:;. _ VIO Ct. C;1_ ktUVC;-Z -L7),) CUIU ci4LL 30; or so in 1960 and 1961. The increase has been more rapid for maize, tapioca., -e-naf eggs, and was also sigrnificant for live cattle, Ca-Stor bDea-nS, hidesUZ CaId skins. In 1961 export of maize, tapioca and kenaf alone accounted for over 80% of ote exportsjJ± u. Fre±cast of uu re gr U~ol-oti are 1-lazardus dueI Lo Uie _iJ)t-UL_L circumstances of the rapid growth of some of these exports, in particular maize and kenaf. Host oi the maize is sold as chicken feed to a single marKet, Japan, Although Japanese consumption is rapidly expanding, increasing competition from otner producing countries in the area is probable. Kenaf production and exports ohich had risen steadily during the Fifties leaped ahead in 1960 and 1961 fol- lowing the shortll in world supplies of Jute causea by heavy floods in Paki- stan in 1959. Pakistan's customers sought alternative sources of supplies, and the uK, Japan and West Germany in particular increased their purchases from Thailand. The market for the other products is equally competitive. There snould nevertheless be scope for further considerable increases in the future. it is however doubtful whether a rate of growth similar to the 30% of recent -;ears can be anticipated. Earnings from "other exports" are therefore assumed to rise at an annual rate of about 10%. The above projection suggests an average annual export growth rate during 1960-1966 of about 3.5%. If it is assumed that net receipts from foreign grants and loans remain approximately at recent levels, the growth in foreign exchange availability would be somewhat less than 3.5%. This is considerably slower than the 6 to 7% average increase of exchange earnings since 1955. It would, however, allow within a balanced payment position for a larger increase in imports than in exports, or about a 4% average rate of import growth during 900-1960, in view of the payment surplus in the beginning year of the period. This would be a much smaller import growth rate than the 5 or 6! anual increase in imports during 1955-1960. It should, nevertheless, be com- patible with continued output expansion around the 5% average trend of the 1950 's considering possibilities for import substitution as well as the flexibility of the Thai import pattern and the aubstantial rise in imports, including non- essentials, of recent years., 54. Slower growth in foreign trade may mean, however, a generally less buoyant economic climate with some adverse effects on incentives and private -.investment capacities as well as on public revenue growth. Consequently, a larger and more effective effort to promote public development and foster private development will probably be necessary to prevent or minimize a slow-down in the over-all growth rate of the economy. - l4 - Public Development Requirements 55. The broad lines are fairly clear for such a public development effort in irrigation and other contributions to agriculture, in pVwe, hih--ay ---- --- tion and improvement, railway and other forms of transport, telecommunications, municipal services, social services, and transiers to a±st.: vu pivaued vepe of manufacturing, agriculture and housing. Additional project opportunities may be established in the near future from current investigations of potenIalit es in the Mekong River Basin, and an examination of development possibilities in the depressed Northeast Region, encompassing about a third of the populatiOn, which is being undertaken with IBRD assistance. I'I Of +hiJ S possibe nroet. ont,nt, rf further nublic investment requires feasibility evaluation and remains to be fitted into a coordinated prOgrm. A+.nta+ivo 14c+inof investments which mp:rit. fn-idPrtinn for such a program suggests, however, a probable level of worthwhile public investment public capital outlays (including both domestic and foreign financed invest- ment)' OiV,' five V' os U But sC an inraed noub_hte dl beTr - fanr beyond Thailand's technical and organizational capacities as well as probable ±~~~~~- -LdI~.d1 4jUUL v< 1From a financial suandpoint, some UificulUEs will be encountered in a major increase in domestic contributions to public investment. As noted, a probable slow-down in foreign trade is likely to have some adverse ef.feV on revenue growth. Export taxes on rice (about 13% of revenue) may be more or less stagnant and income from rubber anU1 teak duties (about 5 of revenue) may decline. Import duties (about 30% of revenue) may also be less buoyant at present rates than in recent years. un tne expeniure siue ltru wa vt pressure for continuation of the marked upward trend of current spending on education and other social services. Increases in current development spend- ing are needed, and some increase in defense and administration is also prob- able since these expenditures have been held more or less constant in recent years. $3. In spite of these prospective difficulties, however, the magnitudes of the financial problem are not large and should e manageable in view of considerable scope for new taxation and improvements in tax administration. An approximate assessment of financial capacities LCr *in3eaa u1 -1v-4-- ment during the next five years might be in the order of 50% or from around /2,00 million at present to perhaps P3,000 million by 196. Ins shoulu be feasible with continued growth in GNP at 4 or 5% a year, with maintenance of uae present 14% ratio of pulic receipts to vr, witn continueu net foreign financial assistance at about recent levels, and with about a 4% rate of in- crease in current spending. Tiis may require an increased revenue effort in the face of adverse foreign trade influences on normal growth of public re- ceipts. But it is hardly a. severe fiscal prescription. And to the extent that delays are encountered, in realizing the results of revenue measures, some use of reserves would meanwhile be feasible in view of Thailand's comfortable foreign assets position. - 15 - 9. The greater difficulty in expanding public investment seems likely L'o ue -L[-OZ Wit U1 LUlancI-LaIl- re or e -11-.hM Of tecIni--l 1-1- ,-.--, capacities for a substantially larger and more effective public capital pro- ity to the level of presently available financial resources has been noted. 2owever, over a IVe year persuuu aniu wi u auuVU.u11a LULUa an _ViImm assistance which is being provided by the Bank and other outside agencies, it should be feasible to achlreve a coUIIdUerau.e increase in the 1Uu aCqjs for public investment. - 16 - III. Creditworthiness 60. The preceding discussion suggests that, along with an increasing domestic financial effort and improvement of public development capacities, Thailand. will require future external financial assistance to meet its in- vestment needs. It is also suggested, on the basis of assumed possibilities for expanded public investment activity and for a practicable domestic fin- ancial effort, that official net external financing requirements could well continue at a comparable level to recent inflows of official borrowing and grants or about $0 million a year. 61. The need for foreign financial assistance has not, of course, been evident in the last two years. As indicated. foreign assets increased in 1960 by as much as official borrowing and grants, and in 1961 by even somewhat more. Foreim exchange has continued to accumulate in the first quarter of 1962. The exchange surpluses have been, however, a recent development and one that is not likely to continue. Between 1955 qnd 1949 foreign assistance more or less matched current payments deficits and there was only a slight addition to re- serves for the neriod- The rennt shift from the rhroinin nPaments qnd inve.t- ment-saving deficits to a balanced or near balanced position reflected a com- bination of factors which are nrobablv tmpnorary The rise in Pechano earnings by nearly a third in two years resulted from two better-than-normal rice harvests: fqvorable world market nnrilit.innz for rico 1-rber and tin; and an iinuisualiv rapid expansion of other exports. This rapid export increase also contributed to hgo~ -i a~~ex fiaca esouces at. a pace considerabl,y beyond capacities for increased government spending. There were, consequently, large expansion in 1960 and more than offset the private credit expansion in 1961. monetary side as well as the export side. 62. The buoyant export conditions cannot be expected to continue, and, as ioted CI the scussion of exporV prospects, the projeceu excUange eUatuziu for the mid-1960's are not significantly higher than in 1961. This, as also n ote, s slkely uo have auverse effects on the trend of public financial re- sources and to require a greater revenue effort to maintain a satisfactory L 'z;'.Y I U d CU.Le C'It4jU CI Ul i Liu au4ucLu'U V DO UD tain public investment at about the present level without further foreign fiacilhep ut in, the less favorale-L export cu_stancesU1;u thatu areu Pr- jected, they are not likely to be sufficient for the substantial increase in pu -; dvelopment- acU-LV.LyUY jtrl SEEIS LIUCUSEWy allu _LeaEiV.LLt Il*lme sze uL vu rae in pulic investment during the next few years is difficult to judge. The 50% increase over five years, which is taken here as the ba si for assessing annual external funancing requirements at around $50 million, is much less than official investment goals. It seems dOu"ul , however, that capaciLes wiLL be up to these official goals, Perhaps the 50% increase will itself prove beyond capacities, but it should be somewhere near practicable possibilities and appears more reaListic than the sti.11 largeo ambitions of the Government. - 17 - 64- Teking the official net external financing requirements at an average annual figure of about $50 million for the next several years, there remains the question of appropriate terms for such financing. Thailand's present external debt commitments amount to $228 million of which $115 million is to the IBRD and $26 million to the U.S. Export- import Bank. Most of the balance is government and government guaranteed obligations to private foreign lenders. Service on this debt would reach a peak of $28 million in 1966 which is 5% of projected exchange earnings in the mid-1960's. This is a moderate service burdea and leaves a con- siderable margin for further external borrowing on conventional terms. 65. Whether this marein is large enough for conventional borrowing of as much as $50 million a year seems questionable. This would raise service requirements in the latter 1960's to about 10% of exchange income. This, of course, is not an unusually high service ratio. It would not be wn excessively difficnilt hirt9n if one nould foresee a declining net de- pendence on foreign assistance by the late 1960's or early 1970's as a -nitC±. nP a rovival nf n Aunnmin Pvrnrt it.Pmion . a mrked qccelerat:ion of import substitution and a narrowing gap between savings and investment. can be achieved, if rubber prices become more or less stabilized at a level which iJS not SO lo0W as to discourage coIntinJued expansion if the pace of export and domestic agricultural diversification can be maintained It seems more probable, during the 1960's at least, that export trends %,j__ ou i.1u t;L LV Ut- C11U LILIMU 4UlJ-LI~J U OAJ U±_LLv.L'- W4. -C J - on a sufficient scale to mEnage a slower import growth corresponding to export trends without a umarked reduct.on in the _4- _V u --- wum Hence the continuation of' recent growth rates is likely to require con- tinuing net external assistance in the latter 1960s and possibly the early 1970's - perhaps as much as or more than in the next few years. In this situation, a debt service ratio of auout V0o In tne lauer 0uus wul require gross external assistance at double or more the recent level in order to maintain the net inflow of such assistance at around a $5U m_LLon Leve* (De This suggests then that wh*ie hinaland can a1uU OuOUtaUial further external borrowing on conventional terms, it would be preferable if part of its external financing requirements could. be met without audLg to foreign payments in the next decade or so. Some of this part could come from Thailand's own reserves in view of the large accumulations of' foreign assets in the last two years, although Thai officials are reluc- tant to make substantial use of reserves for internal and external political reasons as well as because of the uncertainties of export pros.- pects. It is probably also reasonable to expect that part of further U.S. economic aid to Thailand will be on special terms. In addition it would not be inappropriate to blend some IDA credit with additional IBRD lending. MAE TANGI Chien gmai faeMoh OHEE • PAMO ony Kh, Ta NAM PON4ZI r-i Khoni Ko 4 kAMPHAENG 1 Nnknrn PE TCH Saman-ý z C ainat Su nri S vrnKrat SaraB DL M PHRA MAE KLONGA APnn(A PEoiCHB Petchburc umý.rpornl kon Si Thanmarat THAILAND Krab AO RRIGA ^TION PROJECTS', m Existing dams VbL \1 Proposed dams Existing major irrigation project SProposed irrigat:ion projects Exisýti.ng railways 0 50 100 150 200Km k MAMA L AYA unoru ,acSiBRD-95 DEIJ'18ER 31, 1961 WITH MAJOR REPORTED ADDITIONS JANUARY I TO MARCH 31, 1962 (In thousands of U.S. dollar eouival-ents) Debt outstanding ¯Major reported December 31., 1961 additions 1met of Including January 1 - undisbursed undisbursed tiarch 31, 1962 TOTAL EXTERNAL PUBLIG DEBT 113,656 191,189 36,_25 Sterling Conversion Bonds of 1936 1,092 1,092 _ - Privately--placed debt /l 34,201 60,424 24.,325 10,000,C00 Bank of America to NEDCOL, 4½3%, 1954-1963 4,000 4,000 £^ 45o,853 Associated British Oil Eng. to Provincial Electrification Organization, 1957-1962 241 241 $ 7,095,000 Cie. de Fives Lille to NEDCOL, 1955-1962 355 355 ,12,432,000 Cie. de Fives Lille to NEDCOL, 1956-1963 4,227 4,227 1M 336,000 General Electric Co. to Thai Rediffusion Co.. 7ký, 1957-1960 /2 58 58 r, 714,130 John~Thompson Indus6rial Construction Ltd. to the Miunici- pality of Bangkok, 1957-1963 851 851 ;17,000,000 Fugi Car lfg.Co. to Ministry of Defense 1960-1967 17,000 17,000 f. 690,349 Stork-Workspoor to the ChoThuri Sugar 1orp., 1960-196? 191 191 f.1,005,338 Stork-Workspoor to the Cholburi Sugar Corp., 1960-1967 278 278 - DM 10,000,000 Atlas-Handelsgesells- chaft to Preserved Food Organi- zation, 1960-1967 2,000 2,000 8 7)], 2 Degremont ', Pars .to Pt. of Public & Municipal 'orks, i961-1 96 5,000 19,357 2h,325 i12,h90,000 Consortium of Elin-Union, A.G. and 'g i, Austria to Lignite Authority, 6', 1961-1971 - 11,866 IBRD loans 64,65 115,263 - U1.S. Govt. loans - Export-Import Bank 13,898 .14,1- 12,100 /1 X Of hich ;,7,768,00 is guaranteed by Thailand only as to transfer. 7'7 0f which $M 2,948 has been cancelled. Statistics Division IBRD-Economic Staff April 23, 1962 Table II: T-1AILAND -- ESTIMATED CCNTRACTJAL SERVICE PAYMENITS ON EXTERNAL PUBLIC DEBT OUTSTANDING INCJLUDING LNDISBRSED AS OF DECEMBER 31, 1961 WITH MAJOR REPORTED ADDITIONS JANU,RY I To MARCH 31, 1962 (jn thousards of U.S. dollar equivalents) Page 1 Debt out- Debt out- standing Payments during year standing Payments during year Year plus un- Year plus un- disbur sed Amorti- In- Total disbur s ed Amorti- In- Total January 1 zatiori terest January 1 zation terest Total debt Sterling Conversion Bonds of 1936 1962 191,189 11,h93 4,947 16,44o 1962 1,092 350 Uh 394 1963 216 121 15,007 7,671 22,678 1963 742 364 30 39h 1964 201,114 16,441 7,560 24,001 196h 378 378 8 386 1965 184,673 18,461 7,481 25,9)2 1966 166,2 2,3 7,0U3 27,876 1967 1145,379 19,226 6,595 25,821 1968 126,153 18,045 6,132 24,177 1969 108,108 16,308 5,623 21,931 1970 91,800 15,27L 5,096 20,367 1971 76,529 8,993 4,220 13,213 1972 67,536 6-417 3,788 10,205 1973 61,119 6,6714 3,418 10,092 19714 514, 445 5,763 3,050 8,813 1975 418,682 6,036 2,714 8,750 1976 42,646 5,507 2,375 7,882 Privaely-placed debt IBRD loans 1962 60,424 7,2249 153 7,i402 1962 115,263 2,706 1,003 6,709 1963 77,5 ,69 2839 19631 112,557 3,760 6.079 9,839 1964 67,851 8,706 352 9,058 1964 108,797 5,289 5,879 11,168 1965 59,1145 10,323 671 10,994 1965 103,508 5,954 5,604 11,558 1966 48,822 12,768 651 13, 19 1966 97,554 5,881 5,308 11,L89 1967 36,054 11, 243 619 11,862 1967 91,673 5,799 5, 013 10, 812 1968 211,811 9,801 577 10,378 1968 85,874 6,098 4,714 10,812 1969 15,010 7,7714 503 8,277 1969 79,776 6,114 l,398 10,812 1970 7,236 5,149]L 428 5,919 1970 73,362 7,660 4,064 11,724 1971 1,745 1,7 45 52 1,797 1971 65,702 5,128 3,684 8,812 1972 60,574 1,297 3,123 7,720 1973 56,277 4.5148 3,172 7,720 197 4 51,729 h.813 2,907 7,720 1975 46,916 5 4391 2,626 7,720 1976 411,822 5,391 2,329 7,720 Table II : THAILAND - ESTIMLATED CONTRACTUAL SERVICE PAYMENTS ON EXTERNAL PUMTG DEBT OUTSTANDING INCLUDING UNDISBLRSED AS OF IDECEM4BER 31, 1961 WITH MAJOR REPORTED ADDITIONS JANUARY 1 TO MARCH 31, 1962 (C'NT.) (In thousands of U.S. dollar equivalents) Pagýye 2 Debt out- Payrents during year standing-Payments-during-year Year plus un- disbur sed Amorti- In- Total Janury zation terest U.S. Govt. loans - Export-Import Bank 1962 '1,h10 1,18B 747 1,935 1963 25,322 1,234 1,279 2,513 196h 2 s,088 2,068 1,321 3,389 1965 22,020 2,184 1,206 3,390 1966 19,836 2,184 1,084 3,268 1967 17,652 2,184 963 3,147 1968 15,h68 2,146 841 2,987 1969 13,322 2,120 722 2,82 1970 11,202 2,120 604 2,724 1971 9,082 2,120 484 2,604 1972 6,962 2,120 365 2,485 1973 h,842 2,126 246 2,372 197 2,716 950 143 1,093 197 5 1,766 942 88 1,030 1976 824 116 46 162 Statistics Division IBRD-Economic Staff April 17, 1962 Table III Gross Natial Product, 1952-1960 (Billion Baht at current prices) 1952 -954 1956 C957;1958-¯¯¯¯¯-¯95-~~~~¯¯~----- le Gross Domestic Product 1 ___2,L9 54 at market prices Agriculture 12.9 12.7 16.5 16.4 16.6 17.5 18.1 Mining and quarrying 0.,6 0.5 0.7 D.7 0.5 0.6 0.8 Manufacturing 3.4 4.2 5.4 5.8 6.1 6.9 7.3 Construction 0.9 1.0 1.4 1.9 1.7 1.8 2..0 Electricity and water supply 0,03 0.1 0.1 0.1 b.1 0.2 0,2 Transport and communication 1,2 1.8 2.2 2.5 2.5 3.0 3.5 Wholesale and retail trade 5.6 5.9 8.0 8.5 8.6 9.4 10.1 Banking and finance 1.2 1.5 1.8 2.0 2.1 2.3 2.5 Other services 3.2 4.0 4.9 5.2 5.4 5.6 5.8 Gross Domestic Product at market prices 28.9 _16 3.1 43.7 47.4. 2. Net Income from abroad + 0,03 - 0.05 - 0.1 - 0.3 - 0.2 - 0.1 - 0.1 3. Gross National Product at market prices 28.9 31.6 _40.9 42.8 43.5 47.3. 50_. 4, Deficit on Current Account (-) 0.2 - 1.3 - 0.3 - 0.8 - 1.7 - 1.4 - 0.6 5. Gross National Expenditure 29.1 '32.9 41.2 43.6 45.2 48.7 50.8 Gross Investment a 4.1 5.3 5.9 7.2 7.1 8.0 8.3 b Cons,umption 25.,0 27.6 35.3 36.4 38.1 40.7 42.5 6. Indirect taxes 1.7 2.2 2.4 2.9 3.0 3.2 3.4 7. Gross Domestic Product at factor cost 27.2 29.4 38.5 39.9 40.5 44.1 46.7 8. Depreciation 1.4 1.6 2.1 2.1 2.1 2.4 2.5 9. Net National Product at factor - cos t 25.8 27.8 6.4 .37.8 38.4 41.7 44.2 10.. GNP at 1956 prices .317 35.9 40.9 41.7 42.2 46.2 48.7 a Inclusive of adjustment for stock changes. b/ Estiemated. SOUJC: "National Income", 1960 odition, Office of' the NatiLonal EconomiLc Development Bcard, Bangkok. Table IV Indices of Agrcultural Forestry and Fitery Production 1953 100 Paddy 101 111 125 l1 126 84 109 107 118 Rubber 117 102 122 139 139 143 L77 174 189 Other crops2' 71 87 122 151 170 170 223 300 325 Forestry products- 79 81 97 7 77 e2 2 2 Fish 77 93 112 108 114 915 99 112 112 Total 94 103 120 117 129 104 129 141 153 a/ Maize, Mung beans, Cassava, Sugarcane, Coconut, Groundnuts, Castor beans, Soybeans, Sesame, Cotton, Jute, Kenaf, Ramie and tobacco leaves / Teak, yang-wood. firewood and charcoal c/ B ostimiated S'OURC,E: :.Bank of Thailand Table V Production of Prin cip.al Crops and Fore-strv Products (Thousand metric tons or cubic meters) Commodity 1950 1952 1954 1956 1957 1958 1959 1960 19611 Rice (pgddy)b 6,684 7,325 8,239 7,234 8,297 5,568 7,186 7,035 7,462 RubbergJ 115 100 120 137 136 146 174 171 186 Cora 105 126 207 239 238 201 281 300 Tobacco (green leaf) 21 42 53 58 66 69 67 74 76 Maize (unshelled) 27 45 62 115 147 231/ 317 544 600 Kenaf 5 13 8 17 21 30 50 181 200 Cotton 20 24 23 32 37 35 37 45 50 Sugar cane 839 1,476 2,437 3,830 4,147 4,309 4,988 5,382 5,450 Groundnuts (unshelled) 63 76 92 101 118 121 124 152 165 'Cassava (roots) 256 257 283 225 418 487 1,083 1,222 1,500 Iung beans 32 24 28 37 41 41 46 60 63 ,astor beans 3 10 16 24 32 29 34 43 43 ,Soy beans 12 21 21 22 27 22 22 26 26 Chillies .. 38 39 41 42 24 27 Fruits 2,221 1,993 2, 069 2,108 2,147 yegzetables .691 717 745 759 773 Teak 245 261 359 200 188 181 164 154 130 Teng and rung 429 303 253 284 305 Yang 213 253 291 340 380 418 316 321 340 Firel:ood 1,619 1,206 1,063 1,031 1,204 1,123 1,147 1,191 1,300 Charcoal 620 609 665 571 505 603 628 629 600 Bamboo (mil.ion stems) 38 43 48 53 56 Lac (tons)/. 6 16 14 11 5 12 9 a/ Estimated b/ Year in which bulk of the crop is harvested . / Based on export figures SOURE: Information supplied by Bank of Thailand. Table VI Volumne of Principal txports (Thousands of metric tons)7 1952 19 53 1954 1955 1956 1957 1958 1959 1960 1961 Ricie 1,548 1,359 1,002 1,237 1,264 1,570 1,133 1,092 1,203 1,582 Rubber 100 103 136 132 136 135 136 174 170 185 Tin a/ 15 15 14 16 18 18 9 14 17 18 Maize 25 35 37 69 81 64 163 237 515 573 Tapioca 30 44 55 56 77 79 125 15) 239 443 Jute and Kenaf 2 3 3 3 6 15 28 37 62 143 Castor beans 19 21 14 14 22 26 16 35 24 33 hides and skins - 3 5 6 6 6 6 8 8 13 Live cattle b/ - 1 9 24 43 32 54 52 57 69 Eggsc/ - - 1 3 6 8 7 8 16 16 Teak P 59 68 79 88 92 76 73 73 101 65 Lac and lac seed e 6 12 16 17 14 11 5 12 9 8 a/ Tin concentrates b/ 1,000 Heads c 'Per 1,000 d1,000 cu, meters e/ Tons SUURCE: Information supplied by Bank of Thailand. TabIe VII Value of Exports by Princp2l Commodities (Millions of baht) 1952 1954 1956 1957 1958 1959 1960 1961 Major Exports Rice 3,870 3,086 2,867 3,636 2,968 2,530 2,570 3,612 Rubber 900 937 1,523 1,410 1,326 2,336 2,579 2,131 Tin 410 3 5C7 31 255 434 -Z - _0 Sub-total 5,180 4,397 4,897 5,577 4,549 5,300 5,4,36 6,343 Other Exports Maize 28 56 96 74 183 249 551 597 Jute and Kenaf 20 47 70 88 230 626 Tapioca 28 60 98 138 178 194 273 428 Live cattle 40 79 58 59 87 100 119 Eggs .. 11 57 62 45 71 127 128 Castor beans 51 42 63 87 42 7? 71 94 Hides and skins 5 53 48 54 47 71 82 83 Teak 97 211 304 262 239 244 357 253 Lac 43 157 147 81 43 74 59 52 All other donestic exports 451b/ 907W 913 863 738 818 899 991 Sub-total: other exports 703 1,537 1,825 1,726 1,644 1,973 2,749 3,371 Total: oUestic exports 5,883 5,934 6,722 7,307 6,193 7,273 0,450 9,734 Adjustinents Re-exports 68 71 207 248 254 302 199 280 Shipments to diplomatic missions .. . - 74 - 34 - 26 - 35 Other a/ + 3 + 17 + 553 + 586 . ý32 +1. 8 Exports, f.o.b. 5,983 6,022 7,482 8,067 6,413 7,549 8,614 10,014 Index 80 80 - 100 108 86 101 115 133 a/ Made on the basis of excharige records. The larger adjustmnents in 1956 and 1957 are believed mainly attributable to substantial customs undervaluation of rice and rubber exports in those years. b/ Includes Jute and Kenaf. SOURCE: information supplied by Bank of Thailand. Tabile VIII Value of Imports by MajrCaep:ory (Millions of bah.t) 952 1954 1956 1957 1958 19.59 iQ60 19611/ 1. Food and Tobacco 829 Z62 282 897 978 93 89 Products of which: --- -1 --. - milk products (164) (306) (291) (380) (332) (407) (411) (314) tobacco .r ( ?7? 93) (147) (183) (179) (156) ( 95) (14l) 2. Crude Materials 82 84 80 4 72i 143 151 3. Mineral Fuels and Lubricants 420 928 901 946 1024 ??6 of which: - - -- -- gasoline (154) (222) (302) (353) (350) (358) (371) (264) - fuel & diesel oils (103) (162) (263) (323) (337) (342) (370) (291) 4. Animal & Vegetable Oils & Fats 18 27 28 19 25 31 20 11 5. Chemicals of which: 296 526 6, 75 -785 - medicinal & pharmac. (109) (230) (249) (268) (263) (316) (320) (261) - fertilIzers ( 3) ( 7) ( 34) ( 62) ( 45) ( 73) ( 70) (51) 6. iManufactured Goods of which: 2692 3284 3530 16.. 431 3 3.J8.6C 8 ,107 - paper, paperboard ( 57) (150) (169) (292) (213) (228) (265) (230) - textiles, clothing and footwear 1l078) (1310) (1276) _(1158) (1050) (119Z) 2.13) 911 - iron and steel products 268 5 6) 611 654 713 761 568 - simple metal mfg. (238) (324) (291) (370) (328) (299) (373) (290) 7. Non-EleeUtical Mchry. & Equipmt. _24 523 533 3._ 743 1094 1020 752 8. :lectrical Mhry. & EquiprIt. 13 230 353 122 381 400 05 37 9. Transport Equipment of which: 6l 45 637 883 737 706 866 662 - autos, motorcycles, icycles,etc. (171) (254) (349) (383) (329) (216) ) ( - busses, trucks, lorries, chassis (185) (162) (176) (250) (254) (J'392 ))68) (509) 10. Miscellaneous Transactions of which: 380 283 318 20,9 232 367 247 -gold bul11ian ... gold ullion (31) (344ý) .. -91 IK) _(22.. ., 11. Total Imports 5524 702L 7655 8537 8237 985 9622 7603 GOURCE: Infcrmation supplied by Bank of Thailand. 1/ January - September. Table IX 1 l;ncp of Pqvmrnt-r. q7i6 (Millions of US Dollars) 1957 1958 1959 1960 1261 1.0 Goods and Services Merchandise exports, f.o.b. 390 307 357 408 474 Forei-Yn travrel I 4 r5 5 5 Transportation and Insurance 8 10 6 10 12 inves_ctment Tom 6- 6e 4 r7 7) Government n.i.e. 10 12 13 17 21 9v 8. 13 v1c1o 7 Sub-total: Goods and Services 426 348 395 457 537 n- v~ ut -;'r 4 e 4- 4- ILIJ-1 U -UUI UJU' 4 f/ 4 I~U 4 04 4L'1) Merchandise imports, c.i.f. 405 385 424 1447 478 on-monetary gold. 5 1 - 3 0 Foreign Travel 13 10 9 12 11 Transportation, Insurance 9 b 5 6 7 Investment Income 17 13 11 11 13 Government n.i.e. 5 3 4 5 5 Other services 9 7 8 7 9 Sub-total: Goods and Services 463 427 462 491 529 Private donations 11 3 2 2 2 1.3 Net Goods and Services - 46 - 80 - 6 32 13 2.0 Errors and Omissions - 21 10 24 12 3.G Capital and Official Donations Private capital (net) a/ 3_ _ 11 - _L_ Direct long-term 2 3 3 2 Other h/ 1 1 8 8 Official donations (net) 35 25 40 32 13 US Grants 31 21 36 30 11 Colombo Plan, UN Special Agencies etc. 1 1 1 2 2 Settlement with Japan 3 3 3 - - (continuation and footnotes see next page) Table IX(cont d) Balance of Payments, 1957-1961 (Millions of US Dollars) 1957 1959) 1960 1961 Official loans (net) 22 11 10 26 Drawing on loans c/ 28 15 2Z 30 42 ICA 6 1 2 4 7 IBRD 8 5 12 11 12 DL - - 5 6 Erxnrt-Tmnort Bank - - 7 5 2 Suppliers' credits 11 9 3 4 15 'R,qnk nf Arnpri-i ' -n -- Repayment on loans d/ - 6 - 4 - 14 - 15 - 16 Miscellaneous (net) -1 - -1 - 4 1 4.0 Foreign Assets, net (-increase) - 19 - 6 -4 J5 g/ Before 1959, estimated. From 1959, based on exchange records. Excluding un-s. b/ Including trade credits. Q/ including drawings on loans received uy oUvernment enterprisesand private companies under Government guarantee, / Of which, suppliers' credits: 1957:5 ;1955:2 g So ;9:uSo ad 1961:11 SOURCE: IMF and Bank of Thailand. Table X Central Government Accounts (Cash Basis) 1958-1961 (Billions of baht) -- - - - - - - - - - - - - - - - - - -1961 T 1958 1959 l 1960 Budget Projected 'Result 1 1961-62 Jan-Sept Oct-Dec Year IJan-Sept i Budget 1 1 Expenditure 1 : Deferise and Police 1,83 1.86 1.3 1.150 0.50 2.00 .. 2.10 Civil Administration 0.80 0.79 0.80 0.70 0.25 0.95 .. 0.89 Recurring development 1.60 1.68 L.62 1.59 o.49 2.08 .. 2.27 Public debt service 0.29 0.33 0.47 0.45 0.07 0.52 .. .55 . .2 .12 0.53 0.13 0.66 0.82 Capital expenditures 0.8 ' .9 0.92 1 1.27 0.10 1.37 0.94 1.48 ----1 ---- - - 1 -.-- ---- Total 6.09 6.70 6.76 ' 6.04 1.53 7.57 5.48 8.11 Receipt 5.62 l 6.06 '6.79 ' 5.53 1.57 7.10 5.69 7._2 Deficit (-) -0.47 -0.64 0.03 -0.04 -0.47 0.21 -0.69 Financing 0.47 o.64 -0.03 0.51 -0.04 0.47 -0.21 0.69 Non-expansionary 1 p -3 1 4 g 0 3 -.. - Savings Bank U.0 010 17 0.l? ,6 - Non-banking public 0.04 0.08 0.14 0.1.4 Expansionary 0.40 0.46 1 -0.34 1 .. .. ..-0. 1 f.:: - inetary authorities 0.30 U .2 003 ' ¯ ~. ~.¯ --I - Gonmercial banks 0.01 0.06 0.13 . .. .. ' 0.18 - U se of cash 0.09 -0.12 -0.50 ' .. 1 -0.51 Note: Figures are adjusted to a cash basis and expenuitures and receipts allow for net debits or credits in trust funds and similar accounts. Expenditures financed by the US are not included. Due to rounding, the figures do not necessarily add up to the totals shown. SOURCE: Information supplied by Bank of Thaila-d Table XI Central Government Revenues, 1958-1961/62 (Billions of baht) 1958 1959 1960 1961 Jan.--Sept./ 1961762 Budget Actual Budget Income taxes 0.36 0.38 8 0.46 Individual 0.24 0.27 0.47 0.31 0.37 Corporation 0.12 0.11 0.11 0.15 0.18 0.20 Business taxes O. :62 0.83 O.64 01 1.12 Export and similar taxes 1.25 1.30 1.141 ) 1.2 Rice 0.94 0.88 0.89 0.72 )O Rubber 0.13 0.26 0.29 0.25 ) 0.20 Tin and other minerals D.05 0.05 0.08 0.08 ) 2.80 Teak and other wood 0.12 0.09 0.12 0.09 ) ) 0.20 Other exports 0.01 0.02 0.03 - ) ) )1 Import taxes 1.6? 1.80 2.06) 2. Other indireet taxes 0.94 0.89 1.0e 0.83 1. Eýducation and health stanp taxes 0.13 0.14 0.12 0.11 .. 0.14 Total tax revenue 4.80 5.13 6.co 41.89 6.66 Other revenueb 0.81 0.93 0.79 0.64 .. 0.76 Total revenue 5.62 6.06 6.79 5.53 5.69 7.42 /l Nine months fiscal year due to change of fiscal year from calendar year to October-September as from October 1, 1961. o/ Fees, fines and licenses and miscellaneous. sCUIwOE: Information supplied by BanIk of Thailand. Table XII Holdings of Tnternal Government nwy (Pyn nf vpnr) (Millions of baht) 1956 1957 1058 195O 190A 1061 Central Bank Bonds 1,671 1,927 2,078 2,052 2,935 3,205 Treasury bills 3,163 3,198 3,217 3,244 2,057 1,496 Overdraft 970 1,250 1,412 1,737 - 399 - B.0.T. Treasury deposits 560 __ _04 50 Toa ,6 28 ,1 ,3 5,097 5,6 Bonds 143 156 204 294 397 535 Trauy bills 95 __80 __, 17 __24 80 Total 238 236 248 311 421 615 Savings Bank Bonds 57 125 169 268 437 646 Non-banking Public Bonds 222 257 295 375 512 678 Treasury bills 9 8 6 6 27 32 Total 231 265 301 381 539 710 Total 6,890 7,414 7,829 8,591 6,494 7,031 IsURCE: Information supplied by Bank of Thailand Tnhl YTTT Chnes in P)t.or. nffPt.ina thip Myn nlv y 1Qr7-1QA1 (Millions of baht) 1957 I953 1o59 l960 lQCoAl/ Borrowing from. moneta-ly authorities 455 313 494 22 - 178 Total 490 400 658 352 162 cash 33 18 209 602 833 oanuverpart lunub anu PL 480 101 - 78 76 14 52 Other Central Bank liabilities 362 236 - 38 171 86 Net Public Sector - 6 _22 Ill 41 : -809 2. Private Sector Borrowing from banks 606 548 756 1,101 1,112 Less: Time and saving depositsW 177 341 453 7 454 Other liabilities 216 -252 133 71 444 Net private sector 21 5 170 21573 - 3. Subtotal: Domestic factors (1+2) 207 _68 __18 _2 4. Net foreign transactions j1 -390 892 1.064 5. Coins and errors and omissions 14 8 8 8 6. Money Suprly changes 374 20i 6 1,038 469 % annual increase in Money Supply 5 4 6 12 5 Money Supply as % of GNP 19 19 19 20 20 a/ January - September. b/ Including bonds issued by the Government Savings Bank (1957:16, 1958:18, 1959:29, 1960:34 million Baht). SOURCE: Bank of Thailand and International Financial Statistics