(Bloomberg) -- Thailand’s central bank faced renewed calls from the government camp to start easing monetary policy, with Prime Minister Srettha Thavisin’s top aide arguing that Southeast Asia’s second-largest economy needed cheaper borrowing costs to spur growth.

The Bank of Thailand’s Monetary Policy Committee has some room to reduce the key rate to provide “immediate relief” to the people as budgetary support was still at least a month away, Prommin Lertsuridej, the secretary-general to Srettha, said Monday.  

Prommin argued that lower rates can help tackle household debt and boost export value if the baht weakens as a result, while saying the economy needed to be rescued from a “critical condition” caused by elevated debt levels and low capacity utilization. That’s one of the reasons his boss Srettha has listed while appealing for rates to be brought down on an urgent basis.

The prime minister said a 25 basis point reduction in interest rate will neither trigger excessive outflows of capital nor weaken the baht. If the Thai currency were to weak following a rate cut, it will be good for the nation’s exports and tourism, he said on X, in response to comments by former central bank governor and deputy prime minister Pridiyathorn Devakula that cutting the already low Thai borrowing cost will widen the gap with US interest rate and spur fund outflows.  

Srettha said interest rates in other countries were also set to be cut. He has previously cited months of negative inflation prints as evidence of waning consumer demand and, in turn, slowing economic growth.

Srettha and BOT Governor Sethaput Suthiwartnareuput have clashed for months on the approach to reviving the economy, rattling investors and turning the nation’s currency into among the worst performers in the region.

Sethaput has ruled out an emergency MPC meeting, snubbing a demand made by Srettha after data showed the economy had contracted in the final quarter of last year from the preceding three months.

Srettha has vowed to to continue his push for lower interest rate even after the central bank governor said that there was no compelling reason to call an emergency meeting to review the policy rate that’s currently at 2.5%, the highest since 2013. 

Prommin said Monday that the government still aims to roll out the 500 billion baht ($14 billion) digital wallet program in May, although there’s scope for some possible delays. The program aims to handout 10,000 baht cash to 50 million individuals, as part of a goal to boost consumption.

Thailand’s economic growth potential is around 3%, and the government’s target to lift it to 5% may be too ambitious given the country’s aging population and structural issues, Sethaput has said previously. The divergent policy approach to reviving the economy is due to the different mandates vested on the central bank and the government, according to the governor. 

Tesla, Chips

Srettha’s roadmap to turn Thailand into a regional hub for tourism, wellness, aviation, financial services and logistics aims to lift annual growth to an average of 5% by 2030, Prommin said. The country is uniquely placed to take advantage of its good relations with the US and China with its geographical location giving it an edge to attract investment from companies across diverse industries, he said.

Thai authorities are in talks with Tesla Inc. to persuade the US electric-vehicle maker to build a plant for cars and batteries in the country that’s already home to a clutch of Chinese EV makers, Supakorn Congsomjit, an official attached to Srettha’s office told reporters. Tesla executives have already surveyed three different locations with Thailand being the only one guaranteeing 100% green energy among Asian suitors including India and Malaysia, he said. 

Thailand expects firm agreements on investment in the semiconductor and chip industry by US companies during Secretary of Commerce Gina Raimondo’s visit next week, Prommin said. The visit — which follows Srettha’s meeting with her in November — is aimed at strengthening economic relationships across a number of issues, including manufacturing, supply chain resiliency, artificial intelligence, and clean technology, the department said Feb. 23.

(Updates with comments from Srettha from fourth paragraphs.)

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