The referenced telegram recorded the conversation which I had on March 18
with Prime Minister Pibulsonggram in which I outlined some of the measures
in the economic field which the Government of Thailand might
appropriately take for this purpose. The Embassy and USOM had given considerable thought to
this subject and the recommendations contained in the enclosed letter
written to the Prime Minister at the latter’s request consequently
constitute our combined best judgment. They were favorably received by
the Prime Minister when orally outlined to him although the extent to
which they may be translated into government policy and action remain to
be seen.
I may remark, however, that recent measures of the Thai Government
provide a basis for greater optimism in this respect. The most notable
of these, reported in Embassy despatch No. 423, March 2,3 have been Cabinet approval of the proposals of
the Minister of Finance sharply to reduce government expenditures under
the 1955 budget and of the Minister of Finance’s request for earmarking
of part of the U.S. defense support funds to finance a study by U.S.
fiscal experts of means by which Thailand’s system of public finance and
fiscal management may be improved.
[Enclosure]
Letter From the Ambassador in Thailand (Peurifoy) to Prime Minister
Pibulsonggram
Your Excellency: I refer to our
conversation of March 18 during which I reviewed with you the
assumptions on which my government had expressed its willingness to
make available additional assistance during the current U.S. fiscal
year. Among these, as set forth by Mr. Harold Stassen, Director of the Foreign Operations
Administration at Washington, in his letter of December 4, 1954
addressed to General Phao
Sriyanonda,4 was the understanding “that the Thai
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Government will make every
effort to assure the best use of its own resources”.
During our conversation I also noted with satisfaction the steps
recently taken by your government to strengthen the economy of
Thailand, such as the elimination of preferential rates of exchange,
measures designed to tighten exchange control against capital
flight, and the adoption of certain fiscal policies designed to
reduce annual budget deficits. These are illustrative of measures
which may contribute to the development of conditions under which
Thailand’s resources may be most effectively mobilized for economic
progress and under which United States aid can be most effectively
utilized.
In addition, I suggested, for your consideration, certain other
measures which appear to me likely to enhance Thailand’s ability to
achieve maximum utilization of its own resources and thereby
accelerate significantly the growth of its economy. At your request,
I am pleased to outline the more fundamental of these proposals:
- 1.
- Development of a fiscal system which will insure that all
sums spent for governmental purposes are appropriated by the
National Assembly, pass through the national budget, and are
subject to record and account when received or paid out of
the public treasury.
- 2.
- Creation of a Budget Bureau under the direction of the
Minister of Finance for the purpose of examining budget
requests prior to the presentation to the National Assembly
and of supervising expenditure of funds already
appropriated.
- 3.
- Reliance by the government to a steadily increasing extent
on the forces of competition in the fields of industry and
trade.
- 4.
- Adherence to the principle of impartial specifications and
the award to the lowest responsible bidder in purchases by
the government.
- 5.
- Modification and continuous review of controls over
exports of non-strategic commodities to insure that
increasing latitude is afforded to private initiative to
participate in the promotion and expansion of Thailand’s
exports.
- 6.
- Removal of import restrictions not specifically dictated
by balance of payments considerations.
- 7.
- Acceleration of current steps to improve tax collections
and reassessment of the impact of the present tax
structure.
- 8.
- Adoption of measures to encourage the flow of savings into
banking channels in order to augment available capital for
industrial investment.
- 9.
- Liberalization, clarification and codification of laws and
regulations relating to private foreign investment in
Thailand.
Substantial progress in the areas suggested above, would, in my
opinion, contribute significantly to:
- (a)
- Maintenance of political and economic stability,
- (b)
- Creation of a favorable atmosphere for the maximum
utilization of grants-in-aid and technical assistance from
the United States and other international sources,
- (c)
- Making Thailand more attractive to foreign capital for
both public and private projects.
The cordial cooperation and mutual trust which exist between the
Governments of Thailand and the United States afford a unique
opportunity to initiate at this time measures which would promote
economic development, raise the standard of living and strengthen
the independence of Thailand.
My government stands ready sympathetically to consider requests by
your government for technical advice and assistance to move forward
in the areas outlined above or in other allied fields which your
government may suggest. For this reason, I welcome the proposal put
forward on March 3 by your Minister of Finance to use part of the
funds provided under the terms of Mr. Stassen’s letter of December 4 for a study of means
to improve Thailand’s system of public finance and fiscal
management.
Please accept [etc.]
