BANGKOK: The chairman of the Thai central bank urged the government to scrap a politically sensitive and hugely expensive scheme to subsidise rice farmers, saying it was a threat to stability in a country which has faced repeated unrest in recent years.
Traders said the intervention scheme, which helped Prime Minister Yingluck Shinawatra win power in 2011, jeopardised Thailand's position as the world's top rice exporter, warning that the government would eventually be forced to sell its mounting stockpiles of rice at a steep loss.
"The country will be doomed if the government proceeds with the rice-pledging scheme," Bank of Thailand Chairman Virabongsa Ramangkura was quoted on Wednesday as telling the Nation daily, a day after the cabinet endorsed the scheme, with restrictions.
The scheme is estimated to cost as much as 3.5 percent of annual economic output.
It is also likely to continue hurting exports well into 2013, with the government forced to stockpile record amounts of rice in already overflowing warehouses.
Thailand is now stuck with 12 million tonnes, or around one third of the global rice trade, priced so far above what other countries sell the grain for that its exporters have been shut out of the global market.
Virabongsa, an economist parachuted into his job in June by Yingluck despite opposition from central bank officials, has in the past sided with the government.
"This government demonstrates stability. But if there's anything to rock the stability, it's this scheme," he told the newspaper, adding that it would require huge deficit-financed budgets and would open the door to corruption.
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