Thaksin and Pheu Thai Party face constitutional showdown

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ECONOMY

Govt warned on overspending

By THE NATION

Published on August 17, 2010

Thailand could face a fiscal crisis in two to three years if the government continues its "carpetbag-style spending spree" because revenue won't catch up with expenses, the Budget Bureau warned yesterday.

Next year's budget is fixed at Bt2.07 trillion. During the annual budget process, government agencies had proposed a whopping Bt6 trillion in expenditures. But the government can only count on tax revenue of Bt1.6 trillion, leaving it Bt400 billion short of the Bt2.07 trillion. The deficit has to be financed by borrowings.

The National Assembly will vote on the second and third readings of the budget bill for fiscal 2011 from Wednesday-Friday, but the Budget Bureau is expressing growing concern over the unsustainable creep in expenditures.

"If disbursements continue to rise at this rate, we'll run into a budget crisis by 2013 because besides salaries and healthcare for civil servants, government agencies have kept on asking for higher spending," said an official from the Budget Bureau.

"Some agencies can request a budget directly from Parliament without any vetting by the government. At the same time, revenue is falling behind expenditure needs."

The Abhisit government has publicly pledged to balance the budget within five years. But given the growing demand for spending from government agencies and government programmes, it is very unlikely that will happen anytime soon.

Many countries in the developed world are trapped in a sovereign debt crisis, which has grown out of rampant deficit spending by their governments. Greece is fighting a severe crisis because its debt has surpassed the point of no return - more than 100 per cent of gross domestic product - while other European countries such as Spain, Portugal and Italy are under similar pressure. US public debt is also approaching 100 per cent of GDP.

Thailand's fiscal position remains in relatively good shape because public debt now stands at around Bt4 trillion against GDP of about Bt9 trillion. The challenge for the government is to rein in debt so that it won't impair the balance sheet of the country going forward.

The House budget committee has trimmed the additional budget requests by Bt33 billion from the total of Bt60 billion. The Interior Ministry has led the pack by requesting Bt18 billion, followed by the Transport and Education ministries. The Defence Ministry has appealed for Bt1 billion in additional budget.

The Interior Ministry has sought Bt18 billion in additional budget, but will get only Bt8.97 billion. The Education Ministry has asked for Bt9.01 billion but will have to do with Bt5.04 billion. The Transport Ministry will get Bt4.7 billion from Bt8 billion in additional budget request. The Agriculture Ministry will receive Bt1.01 billion out of Bt2.6 billion. The Tourism Ministry is earmarked for Bt1.29 billion out of Bt1.72 requested.

Officials at the Budget Bureau suggest that the government impose a mandatory freeze on spending at a certain level, otherwise it will not have any funds left for investment in infrastructure or other development projects.

Fixed spending in the fiscal budget has been climbing steadily since 1997 after the creation of several independent institutions and government agencies, which need to look after staff and their welfare and also maintain their office buildings. This has placed a further burden on the budget in terms of salary and healthcare costs.

-- The Nation 2010-08-17

[mausplan]

Lets see now, cut the extra 121 APC's 5billion and cancel the order for 96 for failure to deliver 4 Billion, sue the airship crowd 10 billion and the bomb scanner 2 billion , sue the GTX scanner people to get the corrupt share back 5 billion, cancel the next six Grippen 20 billion, use Takkies 46 billion so we are half way to meeting the deficit already.