Monk's fund had moral merit

ANOMA Srisukkasem and Thanong Khanthong say the money donated by the Thais-Help-Thais Fund of Luangta Maha Bua has been of moral rather than financial significance.

Shortly after the Thai financial crisis broke out in 1997, Luangta Mahabua Yannasampanno, the revered monk from Udon Thani, spearheaded a nationalist campaign to come to the Bank of Thailand's rescue. Through the Thais-Help-Thais Fund, he aimed to raise enough money to shore up the value of the baht by contributing the fund to the central bank's sagging foreign exchange reserves. The merit-conscious Thais gladly contributed money to the fund, hoping to play a part in rescuing the country from the depths of the crisis.

Most central bank officials were then caught in an awkward position. They realised that the money from the Thais-Help-Thais Fund represented only a drop in the ocean compared to the country's foreign debt of US$90 billion. The central bank had depleted more than US$30 billion in reserves through its defence of the baht and from its failure to stem the capital outflow due to a loss of confidence over the country's deteriorating macroeconomic conditions.

The gigantic debt burden and the balance of payments crisis had forced the central bank to turn to the International Monetary Fund for a $17.2 billion bailout.

By July 7, 1998, the Thais-Help-Thais Fund had contributed $1.27 million, or Bt60 million (at the exchange rate of Bt47.2/US dollar) to the central bank's coffers. In fact, MR Chatu Mongol Sonakul, the central bank governor, did not want to take the money from Luangta Mahabua because it would not make a difference compared to the scale of the country's problem. It was calculated that the country would have to pay $6 million a day just to service the interest cost alone.

What Chatu Mongol would have liked Luangta Mahabua to do was to encourage people to spend money. They could make merits by building schools or giving money to other charitable causes that would actually use money to stimulate the economy through consumption. The Bt50-billion Miyazawa Plan is an example of spending money in the economy when private investment or consumption has stalled from the crisis.

But what could Chatu Mongol say? For Luangta Mahabua is one the country's most respected monks. He, like Luang Pho Khun of Nakorn Rachasima, is an opinion leader at the national level. When he speaks or preaches, the common people listen to him. Monks from the Northeast region have a longstanding tradition in Buddhist meditation. Luangta Mahabua is part of that great tradition.

However, the cause of the Thais-Help-Thais Fund of Luangta Mahabua is a great one. It provides a moral yardstick for self-sacrifice at a time when the country was in deep peril. But, given its size, it does not serve its primary purpose of acting as reserves to shore up the baht.

In total, the central bank has received the equivalent of about Bt170 million from Luangta Mahabua in US dollars. It has placed the money under the Banking Department's account, which deposits the money at the US Federal Reserve. The money is used according to the wishes of Luangta Mahabua.

The problem started last week when Luangta Mahabua was told that the money from the Thais-Help-Thais Fund might not be used as he had wished. For the central bank is in the process of consolidating its different accounting books, including one of the Note Issue Department and another of the Banking Department. Once the consolidation is completed, there might be some money left that the government will use to pay off to the Financial Institution Development Fund (FIDF), which is saddled with a Bt1.3 trillion debt.

Luangta Mahabua got the impression that the money he helped mobilise might be used to bail out the rich, who used to control the banks or finance companies, so he was exasperated and started to attack the government through his sermon. Prime Minister Chuan Leekpai gave a knee-jerk reaction by ordering Finance Minister Tarrin Nimmanahaeminda to clarify the issue to the public. Tarrin in turn ordered Chatu Mongol to make the clarification.

Yesterday Chatu Mongol submitted a letter to Tarrin. He explained that it was true that Thongkorn Wongsamutr, a spokesman of the Thais-Help-Thais Fund, had conveyed Luangta Mahabua's concern about the potential misuse of the fund's money if the accounts of the Note Issue Department and the Banking Department are to be consolidated. For, some surplus from the account consolidation would be used to pay off the debt of the FIDF.

Chatu Mongol also submitted a clause in a draft amendment of the Bank of Thailand Act which states clearly that the government would use the proceeds from the account consolidation to pay off the FIDF's debt. The governor, who has voiced his disagreement with the government's plan to use money from the reserves, put the ball back in the government's court.