Credit support for Thailand continues to slide, says S&P

SINGAPORE - Government policy decisions with long-term implications for Thailand's economic development are unlikely at least until mid-2017, rating agency Standard & Poor's says in a report published today. The report says gradual erosion of credit support for the sovereign, “which has become obvious in the past two to three years”, is likely to continue at least until the return of an elected Government.

"Without a stable elected government, policy decisions important to Thailand's economic and social development have been unaddressed," said S&P credit analyst, Yee Farn Phua. "Several measures could lift Thailand’s economic potential and reduce growing income disparity, including introduction of a land and buildings tax that could ease the Government's budget constraints and address income inequality."

Education reforms could also better match the Thai workforce's skills to industrial and business activities that would generate higher-skilled jobs in the economy.

“In our view, only a stable Government that is able to focus on a longer-term horizon can reverse some of the damage to Thailand sovereign credit metrics in recent years, in addition to addressing structural concerns,” Phua said. “Support for sovereign creditworthiness had been strong until Thailand's political split broke out into the open in 2006. Since then, political uncertainties have eroded key credit indicators gradually.

He adds: "Despite weaker support for the sovereign ratings from the economic, fiscal, and external assessments, we don't believe these conditions have been material enough for us to expect a rating downgrade over the next year or two. www.standardandpoors.com (ATI).