Thai court deals prime minister setback as bank signals concern

Thai court deals prime minister setback as bank signals concern
Yingluck Shinawatra.

BANGKOK - Prime Minister Yingluck Shinawatra suffered a setback on Wednesday when a court ruled that legislation aimed at raising billions of dollars for investment in ambitious infrastructure projects was unconstitutional.

The central bank, signalling its concern about the economic impact of prolonged political instability, cut its benchmark interest rate by 25 basis points to 2 per cent, a rate last seen in 2010.

Protesters trying to bring down Yingluck and end what they see as the pervasive influence of her brother, ousted former premier Thaksin Shinawatra, have been on the streets for four months.

The confrontation is unnerving consumers, with confidence at a 12-year low, and hurting tourism. Automakers, property firms and hotels in Southeast Asia's second-biggest economy are all facing lower spending.

The government had hoped investment of 2 trillion baht (S$78.5 billion) in infrastructure, including high-speed trains and mass-transit systems for Bangkok, would support the economy for years to come.

The government had wanted to fund the projects off-budget, meaning less scrutiny by parliament, but the opposition took the plan to the Constitutional Court.

The court ruled that legislation on the funding, already approved by the upper house Senate, was unconstitutional, court officials said.

Yingluck said it was regrettable that the country had lost an opportunity to develop its infrastructure. "We tried our best," Yingluck told reporters. "This was an opportunity for everyone, not a government project or for anyone in particular, but an opportunity for the country which has lost momentum."

After the ruling, the opposition said it planned to file a petition with the country's anti-corruption agency, seeking the impeachment of Yingluck and the cabinet for breaching the constitution by drafting the bill.

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