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Embattled Thai PM Unveils Economic Stimulus Plan

Thai Prime Minister Samak Sundaravej was set to unveil a new package of tax cuts and cash handouts on Tuesday in a bid to revive a struggling economy and his government's flagging popularity.

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CNBC.com

The measures, to be announced by Samak on national television later Tuesday after a cabinet meeting, come in the wake of growing street protests and a series of legal cases that threaten his five-month old coalition government.

"The package will help ease the burden on the poor who are being hit very hard by soaring oil prices," Finance Minister Surapong Suebwonglee told reporters before a cabinet meeting expected to approve the measures.

The package, which some estimates put as high as 40 billion baht (US$1.2 billion), includes a proposal to virtually waive excise taxes on ethanol-mixed gasolines and diesel in a bid to counter soaring fuel prices, government sources told Reuters.

If approved, the retail price of diesel could drop by 5.2 percent and bio-gasolines could fall by up to 8.7 percent, a Reuters calculation based on the proposal showed.

A senior government official said the fuel measures would be in place for six months from Aug 1.

No Support For Stocks

Surapong said the package would help poor Thais deal with soaring food and transportation costs after inflation hit a decade-high in June, but he did not give details.

The Thai-language Matichon newspaper quoted unnamed Finance Ministry officials as saying the handouts included waivers of water and electricity bills for the poor, as well as free bus and train rides.

Analysts said the plan was not expected to lend much support to a stock market that has lost nearly 18 percent since a street campaign against the government began on May 25.

"The package will largely help low-income people. It will not do much to boost market sentiment, which will continue to edge lower following overseas markets," Tisco Securities strategist Viwat Techapoonphol said.

Samak's government had promised to focus on the economy after winning a December election that marked Thailand's return to democracy after a 2006 coup ousted billionaire premier Thaksin Shinawatra.

But the six-party coalition has been distracted by a prolonged street protests against the pro-Thaksin coalition government, and more recently legal rulings that cost Samak two senior cabinet ministers.

Samak has so far rejected calls for him to quit coming from the People's Alliance for Democracy (PAD), a coalition of activists, royalists and businessmen who accuse the 73-year-old premier of being a Thaksin proxy. They have vowed to press on with the protests until he leaves.

In a bid to deflect criticism of his cabinet, stocked mainly with Thaksin loyalists and veteran political powerbrokers, Samak told reporters on Tuesday he had list of names for a cabinet shakeup, but did not say when it would occur.