the us economy was not in as bad a shape as thailand has experienced in the past four years. at that time, japan, europe and the middle - eastern economies were strong and contributed certain capital flows into the us economy. but now, under current world economic conditions, where every country has its own problems to solve, we know well that we cannot expect foreign investors to help us clear this npl mess, so we have to help ourselves. i do not see why we cannot do it. and we will do it. back to the economic forecast for next year. one important source of growth in 2002 will be fiscal spending, and the projected central government deficit of 224 billion baht or 4. 4 percent of gdp strikes a good balance between improving the economic infrastructure, raising external competitiveness, and fostering economic recovery. it is very important, however, that the fiscal stimulus program meets its spending target. safeguarding the recovery would require timely as well as effective disbursements of the 58 billion baht emergency spending plan. the proposed reduction in the corporate tax rate for companies seeking listing in the stock market as well as those already listed, and the postponement of the restoration of the vat rate until september 2002 will further set the stage for more support in the revival of domestic demand. additional stimulus will come from the 71. 3 billion baht village fund designed to boost investment and facilitate job creation in rural areas. it is important to emphasize that the planed increase in fiscal spending does not compromise the government ’ s commitment to fiscal discipline. total public debt will remain below 60 percent of gdp while debt service ( principle and interest ) will account for less than 16 percent of the budget. in regards to monetary policy, the inflation targeting framework gives the bank of thailand sufficient flexibility to respond quickly to fast changing domestic and external developments. with inflation remaining subdued and likely to remain contained in the range of 1. 5 - 2. 5 percent for 2002, the emphasis in the near future will be to strike a proper balance between domestic growth and external stability. while the current stance of monetary policy under the inflation targeting framework with emphasis on external stability is accommodative and appropriate given current conditions, the bank of thailand is constantly monitoring developments and will move decisively should circumstances change. in light of the information currently available, and against the background of the bank of thailand ’ s long - run goals of price stability and sustainable economic growth, i believe that the risks at present are weighted mainly

narrowly defined targets. this would help retain precious room for manoeuvre. and it would allow central banks to pay more attention to slow moving trends that have first order economic impact, including more systematic considerations of the financial cycle. the bottom line is that an essential pillar in monetary policy frameworks going forward is to keep a sharp focus on the medium term, grounded in a realistic view of what monetary policy can and cannot deliver. monetary policy cannot fine - tune inflation, let alone economic activity within narrow ranges. it can only provide the monetary preconditions for sustainable growth, but cannot itself be the engine of growth. it is important to build on these insights for inflation targeting to successfully evolve in the years ahead. 4 / 4 bis - central bankers'speeches