twenty years, and the financings will be provided for in the government budget. this incorporation is projected to keep the share of the debt - service ratio to an average of 13. 6 % of the government budget in the first decade and 11. 5 % in the second decade. this means that there will be little crowding - out effects on the government ’ s investment expenditure in the period ahead, while the public debt stock - to - gdp is projected to trend down in the long term. with this programme, thailand ’ s long - term fiscal sustainability is now assured. with monetary stability in place and fiscal stability enshrined in the government ’ s long - term fiscal sustainability framework, i believe the operating environment in thailand in the period ahead will be more assured and remain conducive to growth. but to really put the growth engine back on its feet, notably the recovery of the domestic demand, more works will have to be done at the micro level to remove the bottlenecks that inhibits the real economy. this leads to our second challenge : to put the banking system back to normal lending. our banking system is returning to health and profitability with strengthened capital base, and a much lower level of non - performing loans. yet, the growth in credit has been very minimal with deposit growth rising and liquidity remaining ample. finding solutions to this problem is not going to be easy. but this is where efforts to revive the domestic economy will need to focus on. new lending is perceived as risky given the current negative factors on the macro fronts and external factors, while npl overhang preoccupied bankers ’ attention and kept them from renewing their client relationship. to address this problem, the authorities have chosen to approach the problem in three ways : · first, to further accelerate corporate debt restructuring by improving the legal frameworks and by setting up a national asset management corporation to deal with the remaining unresolved problem loans. progress on this front is most visible. the law establishing the thai asset management corporation, or tamc, was passed and operations set to begin soon with all asset transfer to be completed by september. a key benefit of tamc is the advantage of being a single creditor of the transferred asset. this would allow tamc to deal effectively and speedily with the unresolved debts that involve multiple creditors. also, the vast executive powers given to tamc by law would make it easier for tamc to take a comprehensive approach to debt restructuring, and have the

decision, one prominent view is that financial stability should be addressed mainly by macroprudential tools, and that, if effectively deployed, macroprudential tools can free up monetary policy to focus on price and output stabilization objectives. while this might hold true in some advanced economies, operationalizing macroprudential tools in practice — especially in emerging markets — has proved challenging. limited experiences and complex interactions among various policy tools make calibrating macroprudential measures extremely difficult, not to mention the risk that these tools might inadvertently push some activities outside of the regulatory umbrella into shadow banking. my view, therefore, is that macroprudential tools are complements, rather than substitutes, for the broader monetary policy stance. ladies and gentlemen, the three factors i have mentioned — inflationary pressure, growth, and financial stability — are factors that the mpc consistently looks at when deliberating monetary policy ’ s transition under the flexible inflation targeting framework. but before i make my concluding remarks, i would like to mention that when we are confident that economic growth is close to its potential and inflation will remain within our target range, the mpc can take a longer view. and this is when policy space should be taken into consideration. two considerations are at play. first, history has taught us that a period of prolonged economic expansion comes with asset price bubbles and market correction and recession. a gradual, anticipated, movement in the policy rate reduces the risk and the size of such outcome. second, through the most recent economic downturn, our policy rate has been lowered to 1. 5 percent, a quarter percentage point above the historic low level of 1. 25 percent implemented in 2009 immediately after the peak of the global financial crisis. this was done with the aim to stimulate economic recovery. we now have limited “ monetary policy space ” to act should unexpected adverse economic conditions emerge. in very much 4 / 5 the same way that our foreign reserve build - up in times of capital inflow allows us room to conduct a diverging monetary policy and smooth out sudden capital outflows as we have seen these past months, building up some policy space for the future should be a prudent consideration. ladies and gentlemen, with the ample external buffers we have built up, thailand so far has the autonomy to deliberate our own monetary policy. i have outlined for you the main factors that the mpc considers : inflation, growth, and financial stability. we expect this year ’ s headline inflation to be in