Govt: 2019 budget deficit appropriate

 

 

BANGKOK, 15th June 2018 (NNT) - The government has explained that it will run a budget deficit next year to create strong foundations for the country. Prime Minister Prayut Chan-o-cha confirmed that the government will spend the budget most efficiently. 

The PM says the budget deficit will create jobs and reform the economic structure. It will also support the country's economic recovery and enhance the capacity of the business sector. He reiterated that the budget deficit is appropriate and will not affect fiscal discipline. 

The PM confirmed that the government will spend the 2019 budget efficiently and will not create long-term problems as in the past. 

Spokesman of a committee responsible for considering the 2019 Appropriation Act said the committee believed that the budget for the 2019 fiscal year is appropriate and the budget does not increase much from the previous year.

 

-- nnt 2018-06-15

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A fiscal deficit in line with a moral and intellectual deficit.

21 hours ago, webfact said:

will not create long-term problems as in the past. 

Creating long-term debt since the beginning of the Prayut government will become an intentional  problem for successive elected governments by hobbling their own national agendas. This is apart from the financial commitments required under the NCPO-drafted 2017 Constitution for future elected governments to implement the NCPO's 20-year reform plan.

Prayut's earliest promises (2014):

• " We will adhere to fiscal prudence and not overspend the national budget.  We will also keep national debt in check."

 http://www.mfa.go.th/main/en/media-center/3756/46174-National-Broadcast-by-General-Prayut-Chan-O-Cha,-H.html

• "He also says his government will maintain financial and monetary discipline, and will not resort to budgetary overspending in order to win support from the public." "Unlike an elected administration consisting of politicians who always think about getting re-elected, his government has no need for populist policies"

https://www.thaivisa.com/forum/topic/759452-thai-govt-policy-statement-reform-a-just-society-top-goals/

 

 

I doubt there's anybody in government who has any idea what running a deficit means, what the short term positive and negative consequences are and the long term effect.

 

But then neither do politicians or voters the world over. Until there is a greater understanding of fiat currencies amongst governments and voters, Joe Bloggs reading these stories will continue to think government finances should be run like personal finance and the few economists who understand and run the show will ensure the money stays in the right places.

 

I'm reading about modern monetary theory, hard going but interesting to a geek.

8 minutes ago, naboo said:

I doubt there's anybody in government who has any idea what running a deficit means, what the short term positive and negative consequences are and the long term effect.

 

But then neither do politicians or voters the world over. Until there is a greater understanding of fiat currencies amongst governments and voters, Joe Bloggs reading these stories will continue to think government finances should be run like personal finance and the few economists who understand and run the show will ensure the money stays in the right places.

 

I'm reading about modern monetary theory, hard going but interesting to a geek.

Well, I do know that the Thai budget deficit has been very low for many years and an agreement was reached last year, publically, to increase that deficit since it can be a cost-effective way to finance infrastructure and economy stimulation projects. Simply, the government borrows from the budget and creates a deficit, at the end of the year that becomes debt which is then financed by issuing government bonds. For the next 25 years the government will pay 5% or thereabouts in dividend payments on those bonds and in 25 years time, inflation will have eroded the value of the debt by 65% or so, that means when the bonds come due for redemption it will cost the government only 35% of the original amount they borrowed. Every government does the same thing, the dividend payment equivalents in the case of the UK amounts to some £50 billion per year.

Edited June 16, 20188 yr by simoh1490

Yeah, bleed it dry before forced into exile. A cunning plan.

2 hours ago, Srikcir said:

Creating long-term debt since the beginning of the Prayut government will become an intentional  problem for successive elected governments

Those big infrastructure projects which will be funded mostly by borrowings and partly by the budget, PPP and investment funds are risky. The government infrastructure spending just for roads, ports, airports and rail will be close to 900 B Baht in 2018. EEC infrastructure projects is over 2 trillions. That’s a lot of borrowing and the interest alone will take up a portion of the future budget. Governments will have to shoulder these borrowings and also to ensure that the all the projects will be profitable. With such massive borrowings, there little wiggle room for failures. Next governments must get it right in managing these projects and get a good return on investment. 

21 minutes ago, Eric Loh said:

Those big infrastructure projects which will be funded mostly by borrowings and partly by the budget, PPP and investment funds are risky. The government infrastructure spending just for roads, ports, airports and rail will be close to 900 B Baht in 2018. EEC infrastructure projects is over 2 trillions. That’s a lot of borrowing and the interest alone will take up a portion of the future budget. Governments will have to shoulder these borrowings and also to ensure that the all the projects will be profitable. With such massive borrowings, there little wiggle room for failures. Next governments must get it right in managing these projects and get a good return on investment. 

What do you propose as an alternative to borrowing for those infrastructure projects?

53 minutes ago, simoh1490 said:

What do you propose as an alternative to borrowing for those infrastructure projects?

Prudency, transparency, parliamentary participation, public hearings, environmental consideration and strategic. 

 

 

 

On 6/16/2018 at 5:57 PM, Eric Loh said:

Prudency, transparency, parliamentary participation, public hearings, environmental consideration and strategic. 

 

 

 

Funny, you've forgotten where you are my lad...perhaps in thirty years, maybe.

On 6/16/2018 at 4:33 PM, Eric Loh said:

Those big infrastructure projects which will be funded mostly by borrowings and partly by the budget, PPP and investment funds are risky. The government infrastructure spending just for roads, ports, airports and rail will be close to 900 B Baht in 2018. EEC infrastructure projects is over 2 trillions. That’s a lot of borrowing and the interest alone will take up a portion of the future budget. Governments will have to shoulder these borrowings and also to ensure that the all the projects will be profitable. With such massive borrowings, there little wiggle room for failures. Next governments must get it right in managing these projects and get a good return on investment. 

It was my understanding that part of the purpose of the PM's visit to Europe was to try to find investors for the EEC projects. Without investors I expect the EEC Corridor will be nothing more than a dream.

In addition the EEC Corridor will need a reliable energy supply which sun and wind cannot provide. Hence his push for a coal fired power station. He will have a battle on his hands with that one.

A budget deficit to finance infrastructure is not such a bad thing but using it for the purchase of military hardware (submarines etc.) does nothing to make the country grow or provide employment. But in the minds of military generals who need new toys to keep themselves occupied that reasoning counts for little.

On 6/15/2018 at 4:19 PM, webfact said:

The PM confirmed that the government will spend the 2019 budget efficiently and will not create long-term problems as in the past

He's talking about running up a deficit when he only has office for half of the fiscal year.

49 minutes ago, Cadbury said:

It was my understanding that part of the purpose of the PM's visit to Europe was to try to find investors for the EEC projects. Without investors I expect the EEC Corridor will be nothing more than a dream.

In addition the EEC Corridor will need a reliable energy supply which sun and wind cannot provide. Hence his push for a coal fired power station. He will have a battle on his hands with that one.

A budget deficit to finance infrastructure is not such a bad thing but using it for the purchase of military hardware (submarines etc.) does nothing to make the country grow or provide employment. But in the minds of military generals who need new toys to keep themselves occupied that reasoning counts for little.

Part of the purpose of this visit is also to buy a a satellite.

 

https://www.channelnewsasia.com/news/business/thailand-to-buy-airbus-satellite-as-prayut-visits-france-10437186

1 minute ago, coulson said:

Part of the purpose of this visit is also to buy a a satellite.

 

https://www.channelnewsasia.com/news/business/thailand-to-buy-airbus-satellite-as-prayut-visits-france-10437186

That would be the satellite he originally said was not being considered for purchase. The size of the envelope for that would be mind blowing.

We can put the satellite in the budget category of military hardware (people spying) and include it in the collection of war toys that are headed Thailand's way for the Generals to play with. 

4 hours ago, Cadbury said:

It was my understanding that part of the purpose of the PM's visit to Europe was to try to find investors for the EEC projects. Without investors I expect the EEC Corridor will be nothing more than a dream.

In addition the EEC Corridor will need a reliable energy supply which sun and wind cannot provide. Hence his push for a coal fired power station. He will have a battle on his hands with that one.

A budget deficit to finance infrastructure is not such a bad thing but using it for the purchase of military hardware (submarines etc.) does nothing to make the country grow or provide employment. But in the minds of military generals who need new toys to keep themselves occupied that reasoning counts for little.

The EU visit is nothing more than a self enhancement attempt to raise his international profile as EU soften their stance after distancing itself from the junta following the coup.  France trip has a specific agenda which is to conclude the Airbus deal for the satellite. The UK visit was to reciprocate Boris Johnson's visit in Feb. I doubt much business deals can be made unless he announce an election date and a return of democracy which investors will be keen to know before they make any decision. 

Create jobs? Is that for all

those who are loosing their jobs due to hotel closures? 

 

Last time I checked every business struggled to find staff, but he wants to create jobs?