Central bank: New revenue hunt
24 years still likely to pay off FIDF 1997 crisis debt recently shifted to Bank of Thailand in possibly unconstitutional bypassing of parliament by executive decree.
24 years still likely to pay off FIDF 1997 crisis debt recently shifted to Bank of Thailand in possibly unconstitutional bypassing of parliament by executive decree.
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Economics
BoT plans hunt for more revenue
Levy will be reviewed every three years
Wichit Chantanusornsiri & Chatrudee Theparat
While four recent executive decrees begin a hearing process at the Constitutional Court today, the Bank of Thailand, affected by the most contentious decree, is moving forward to seek additional revenue to repay massive debts.
The disputed decree states that responsibility for paying 1.14 trillion baht in Financial Institutions Development Fund (FIDF) debt will be transferred to the central bank.
Under the decree, the Bank of Thailand is authorised to collect fees of up to 1% of local bank deposits to repay those liabilities.
Povongtip Poramapojn, senior director of the central bank's fund operations, said since the government, the private banks and the central bank finalised a 0.47% levy, an increase of seven basis points, on the deposit base of all banks, the fund is also required to seek new revenue sources quickly.
"This year we'll have to see how much we can do," said Ms Povongtip.
We gain revenue of about 7 billion a year from asset management and will have to assess whether our assets can rise in value or decline. The interest rate must be taken into account as well.
Also, we were selling out many of those high-value assets before, so we have not many left to make more money.
The FIDF's net asset value stood at 185 billion as of Dec 31, contributing income of 8.74 billion baht last year.
Meanwhile, Prasarn Trairatvorakul, the central bank's governor, said the fee rate will probably decline from 0.47% on the assumption that the deposit base will grow by 4% yearly coupled with the trend of lower interest rates.
A lowered rate would help the banking sector compete with the advent of the Asean Economic Community in 2015
Dr Prasarn said the levy will be reviewed every three years.
"We project we may have to spend about 24 years to clear this debt, during which it could be revised depending on the deposit base if we gain more income and if interest rates decline," he said.
At present, the total deposit base including bills of exchange is valued at 9.7 trillion baht - 3.3 trillion held by state-run banks and the rest by private banks.
Dr Prasarn said the additional seven basis points only marginally increases the cost for banks, thus the banks need not pass any cost on to customers.
Meanwhile, former finance minister Korn Chatikavanij repeated concerns over the effect of the measures on fiscal discipline.
Present Finance Minister Kittiratt Na-Ranong expressed confidence that today's hearing will go well.
We must answer the financial institutions' question of how do we pay this huge debt before borrowing more.
(Source: Bangkok Post, Economics, BoT plans hunt for more revenue, Levy will be reviewed every three years, 15/02/2012, Wichit Chantanusornsiri & Chatrudee Theparat, link)
Banking Vocabulary
revenue - income from taxes or business activities รายได้
BoT plans hunt for more revenue
levy - tax
Levy will be reviewed every three years
executive - the highest level managers in a company
process - a series of actions that you take in order to achieve a result แนวทางปฏิบัติ, กระบวน, วิธีการ
contentious - causing or likely to cause disagreement ซึ่งโต้เถียงกัน, ซึ่งเป็นที่ถกเถียงกัน
decree - an official order or decision made by the ruler of a country
massive - very large in size, amount or numberใหญ่โต มหาศาล
debt - an amount of money that you owe หนี้
While four recent executive decrees begin a hearing process at the Constitutional Court today, the Bank of Thailand, affected by the most contentious decree, is moving forward to seek additional revenue to repay massive debts.
disputed - involved in a disagreement มีความขัดแย้ง
responsibility - 1. being blamed for something that goes wrong, 2. having to take care of some task as part of your job
transferred - moved
The disputed decree states that responsibility for paying 1.14 trillion baht in Financial Institutions Development Fund (FIDF) debt will be transferred to the central bank.
authorised - activity given official permission to happen ได้สั่งการให้
fees - money that you pay to be allowed to do something ค่าธรรมเนียม
liabilities - debts; money that a company owes others; money borrowed by a company (liabilities + owners' equity = assets) หนี้สิน หนี้ขององค์กร
Under the decree, the Bank of Thailand is authorised to collect fees of up to 1% of local bank deposits to repay those liabilities.
fund - money provided for some purpose เงินทุน กองทุน
finalised - make a final decision about something
deposit - the amount of money that a person or company keeps in a bank account in a bank (See Wikipedia)
deposit base - all of a bank's bank accounts
deposit base of all banks - all the bank accounts in all the banks of every bank in the country
revenue source - some way that a company or organization will make money
new revenue sources
seek new revenue sources quickly
Povongtip Poramapojn, senior director of the central bank's fund operations, said since the government, the private banks and the central bank finalised a 0.47% levy, an increase of seven basis points, on the deposit base of all banks, the fund is also required to seek new revenue sources quickly. "This year we'll have to see how much we can do," said Ms Povongtip.
assets - things owned, especially property and money สินทรัพย์ (See Wikipedia)
assets rise in value
assets decline in value
high-value assets
low-value assets
assess whether our assets can rise in value or decline
interest - payments made for the use of another's money for a period of time (See Wikipedia)
interest rate - the cost of borrowing money expressed as a percentage of the amount borrowed (See Wikipedia)
asset management - buying and selling assets or renting them out, to get the highest income or revenue possible from them
taken into account - must be included (as a factor) in the final decision
as well - additionally, in addition, must do this too
We gain revenue of about 7 billion a year from asset management and will have to assess whether our assets can rise in value or decline. The interest rate must be taken into account as well. Also, we were selling out many of those high-value assets before, so we have not many left to make more money.
income - money that people receive from work or some other source, used for household consumption and savings
contributing - the amount given by one source (among many sources)
contributing income of 8.74 billion baht last year
The FIDF's net asset value stood at 185 billion as of Dec 31, contributing income of 8.74 billion baht last year.
fee - an amount of money that you pay to be allowed to do something ค่าธรรมเนียม, ค่าตอบแทน, ค่าบริการ
fee rate - a fee given as a percentage tax on some amount
assumption - something that you consider likely to be true even though you have no proof ข้อสันนิษฐาน
coupled with - combined with, added to
trend - a gradual change or development that produces a particular result ทิศทาง แนวโน้ม
trend of lower interest rates.
Meanwhile, Prasarn Trairatvorakul, the central bank's governor, said the fee rate will probably decline from 0.47% on the assumption that the deposit base will grow by 4% yearly coupled with the trend of lower interest rates.
Asean Economic Community - the unified economic system of Southeast Asian countries that will start in 2015 (zero tariffs on exports between ASEAN countries, free labour mobility between countries in ASEAN)
sector - a part of the economy ภาคเศรษฐกิจของประเทศ (public sector = government, private sector = all businesses, household sector = families and consumers, banking sector,...) (See Wikipedia)
banking sector - all the banks in the economy of a country
advent - beginning
advent of the Asean Economic Community in 2015
A lowered rate would help the banking sector compete with the advent of the Asean Economic Community in 2015
review - to look at some policy being used, evaluate it and decide whether to keep it, end it or change it
Dr Prasarn said the levy will be reviewed every three years.
project - say what you think something will be in the future
clear a debt - pay back a debt, when the borrower pays back money borrowed to the lender
revised - changed เปลี่ยนแปลง
We project we may have to spend about 24 years to clear this debt, during which it could be revised depending on the deposit base if we gain more income and if interest rates decline.
bills of exchange - a written order for a person or an organization to pay a particular amount of money to someone when asked or at a particular time, used especially in international trade (See Wikipedia)
state - government รัฐ
state-run banks - banks that are owned and run by the government
private banks - banks that are companies with stockholders that are people (not the government)
At present, the total deposit base including bills of exchange is valued at 9.7 trillion baht - 3.3 trillion held by state-run banks and the rest by private banks.
basis points - one hundredth of one per cent, often used to express the interest rate on bonds (See Wikipedia)
marginal (adjective) - a small amount
a marginal increase - a small increase
marginally (adverb) - increases only by a small amount
marginally increases costs
only marginally increases the cost for banks
pass cost on to customers
need not pass cost on to customers.
need not pass any cost on to customers.
Dr Prasarn said the additional seven basis points only marginally increases the cost for banks, thus the banks need not pass any cost on to customers.
concerns - worries; things that people are worried about ความกังวล
repeated concerns - once again made a public statement about why he was worried (what he felt was wrong)
measures - actions taken to solve a problem มาตรการ
fiscal - related to government spending; connected with the government budget, i.e., public money เกี่ยวกับงบประมาณ
discipline - control; following rules and standards of behaviour ปฏิบัติตามระเบียบข้อบังคับ (See glossary)
fiscal discipline - when a government has a "balanced budget over the course of the economic cycle (meaning, on the whole, running surpluses in expansions and deficits only in contractions)" many believe that this "is necessary for the price level to remain stable: unsustainable deficits will require inflation in future" (See Wikipedia and fiscal adjustment)
effect of the measures on fiscal discipline
Meanwhile, former finance minister Korn Chatikavanij repeated concerns over the effect of the measures on fiscal discipline.
confidence - feel sure about something; being certain about something; trusting and believing in something ความมั่นใจ ความเชื่อมั่น
express confidence - say that you are confident (or talk in a way that shows that you are confident)
Present Finance Minister Kittiratt Na-Ranong expressed confidence that today's hearing will go well.
