Home 
Countries and Regions Country Partnership Strategies Document
IV. Country Performance and Lending LevelsA. Proposed Lending Level28. On many measures, Thailand’s economic and social circumstances have regressed over the past five years. Thailand is now further from graduation than it was in the mid-1990s, underscoring the continuing need for concessional assistance. Thailand's advance repayments of ADB loans in 2000 were based on the expectation of a strong recovery, which has not materialized. Indeed, further social reversals could occur if slow growth proves to be protracted. Other considerations suggest that a borrowing relationship with ADB will continue to be in Thailand’s interests over the medium term. Thailand has large scheduled repayments to multilateral and bilateral creditors falling due over the next two fiscal years. It also faces the prospect of having to refinance a substantial portion of public debt in 2004. The introduction of lending products based on the London interbank offered rate (LIBOR) now makes ADB funding more competitive than before. Thailand may also wish to retain a borrowing relationship with ADB as it serves as a vehicle for TA, policy dialogue, and involvement in regional cooperation. B. Loan Program29. Subject to the availability of resources and finalization of the Government's borrowing program, a loan pipeline has been prepared for 2002-2004 totaling $1.0 billion, or an average annual lending level of about $330 million, the same level of lending that was made in 1995 and 1996 prior to the crisis. The pipeline includes a public sector resource management SDP loan for $250 million, as a standby in 2002. Following the Government review of its policies, a decision will be made whether to proceed with this loan in 2002 or to drop it from the pipeline. If a decision is taken to process the loan, the north-northeast region area development loan will then be deferred to 2003, and the loan pipeline adjusted accordingly. Delivery of the proposed program and support for quick disbursing assistance will depend on country performance, including the quality of economic management, government commitment to implement policy and institutional reforms, portfolio performance, and continued improvements in the governance dimensions of ADB operations in Thailand. Based on poverty classification guidelines, about 46 percent of planned projects (44 percent of lending amount) are poverty interventions while the remaining 54 percent are not classified (56 percent of lending). Social infrastructure projects are planned to account for about 36 percent of total lending; financial sector projects, for about 32 percent; and multisector for 24 percent; agriculture projects, 8 percent. Appendix 4 presents a breakdown of the proposed lending program by poverty classification, thematic priority, and sector separately for the first year (2002) as well as subsequent years (2003-2004). In conjunction with ADB’s lending program, ADB will continue to actively pursue cofinancing from official and commercial sources to address effectively the important thematic priorities for ADB operations in Thailand. C. Technical Assistance and Economic and Sector Work Program30. The TA program focuses on capacity building, policy reforms, and governance reforms in the social, rural, and financial sectors, and the preparation of participatory project designs. Subject to the availability of resources, a TA pipeline has been prepared for 2002-2004 comprising 16 activities requiring an indicative planning figure of $8.1 million, or an average annual TA level of about $2.7 million, excluding cofinancing requirements from other sources of $3.3 million. 31. Economic and sector work in Thailand is to support sound preparation of ADB’s lending operations; to improve knowledge and understanding of the links between poverty reduction, growth and ADB’s crosscutting concerns; to backstop capacity building; and to contribute to a variety of subregional cooperation initiatives. To meet these objectives, the CSP will develop TA pipelines that adequately support lending operations through associated project preparatory, advisory, and capacity building TAs. A proposed economic and sector work pipeline for 2002-2004 is included in Appendix 5. D. Summary of Changes32. The TA and loan pipelines included in the 2001-2003 country assistance plan have benefited from extensive review within ADB and have undergone a number of revisions in consultation with the Government. MOF will seek alternative financing from other sources for the regional rural road upgrading and maintenance SDP proposed for 2003; this loan and related project preparatory TA were dropped from the pipeline. A second social sector reform program and rural wastewater treatment plant rehabilitation project are included in 2003, and a second higher education development project is included in 2004. This is to respond to Government requests for follow-up assistance in these sectors and is consistent with the proposed strategy. TAs to prepare these loans and a small-scale TA in 2001 to prepare the secondary education development program are included. A public sector resource management SDP, focusing on contractual savings and pension and provident funds initiatives, and a micro- and small-enterprise financing loan are proposed as standby loans in 2002 and 2003, respectively. To meet the Government’s desire to enhance long-term industrial competitiveness and provide support for technology development in business, a science and technology improvement SDP is proposed for 2004. 33. In accordance with the priority areas identified by the CSP and requests from MOF officials, the solid waste management, river basin development, and Khon Kaen water supply and wastewater management projects were dropped from the loan pipeline. The TA on Thailand as a development resource and on rural poverty reduction were also dropped. The concept and scope of the capacity building for local government in financial management TA will be incorporated into the north-northeast region area development project. The TA on regulation and supervision of microfinance at the Bank of Thailand (2002) was combined with TA to establish legislation for operating microfinance institutions (2001), reflecting the close linkages between the two TAs. Following discussions with Government officials during the CSP Formulation Mission, TAs are included to assist the Government with planning for programs related to decentralization initiatives, municipal debt policy, foreign direct investment, competition policy, deepening capital market development, establishing a secured transaction system, and preparing the social sector for an aging population. Project selection briefs and TA concept papers are provided in Appendix 6.
|
|||||||||||||||||||||||
RSS Feeds
Back
Top of page