Thai Govt Budget Bogged Down By Bureaucracy

webfact · August 17, 2010

Budget bogged down by bureaucracy

By THE NATION

Despite huge revenue rise, spending on development is meagre

As the opposition Pheu Thai Party this week plans to vote down the Budget Bill for the 2011 fiscal year, the public finances look increasingly unsustainable under the burden of fixed or mandatory spending to maintain a bloated bureaucracy.

Siam Commercial Bank's Economic Intelligence Centre has released a report showing the budget is under tight constraint, with most of the tax revenue going into mandatory spending to nurture civil servants and the bureaucracy, and with almost nothing left to invest in economic or development projects.

Over the past 10 years, budget spending on the salaries of civil servants and other mandatory costs to maintain the bureaucracy has jumped significantly, while the investment portion from the budget has hardly increased at all, the report suggests.

"Between 2001 and 2011, the size of the fiscal budget has increased from Bt910 billion to Bt2.07 trillion, or an expansion by Bt1.16 trillion," the report said. "During this period, the investment portion from the budget has risen by only Bt24 billion, while the fixed and mandatory and welfare spending has soared by Bt1.105 trillion."

Parliament is scheduled to debate the Budget Bill for fiscal 2011 from today until Friday.

A Pheu Thai source said the party had lined up its MPs to grill ministers on the budgets earmarked for the Defence, Interior and Finance ministries, as it alleges that these agencies are engaged in irregular and non-transparent disbursements.

The 2011 budget is no different from the previous budgets, with the government being handcuffed by mandatory spending to cope with the bloated bureaucracy.

Tax revenue is expected to garner Bt1.6 trillion, almost all of which will go into fixed spending such as salaries, welfare, healthcare, benefits and other costs of the bureaucracy. There is nothing left from the tax revenue to spend on economic and development projects.

But since the government has set the 2011 budget at Bt2.07 trillion, it means it will be running a deficit of Bt420 billion. This is equivalent to 4.1 per cent of gross domestic product. Of this amount, Bt33 billion will go to servicing the principal from the public debt, Bt30 billion to compensating the treasury coffers and Bt179 billion to servicing debt interest.

The public debt now stands at more than Bt4 trillion, compared with last year's GDP of Bt9 trillion.

There remains Bt178 billion from the deficit that will go into investment projects. When taking into account the Thai Khemkhaeng stimulus programme of Bt150 billion, the government will have a combined Bt328 billion in its war chest for spending on economic and development projects.

The health of the budget remains relatively sound, with public debt hovering over 43 per cent of GDP. This compares with more than 200 per cent for Japan, 133 per cent for Greece, 67 per cent for Spain, 57 per cent for Malaysia and 48 per cent for the Philippines.

However, if spending is not curbed, it will add pressure on public debt, which could spiral out of control as in most developed economies that are suffering from chronic sovereign debt.

Pheu Thai is expecting to draw blood from the government by exposing irregularities in the budget of three ministries - Defence, Interior and Finance.

"We plan to debate the budget in a similar fashion to a no-confidence debate, which is also nationally broadcast via television. There are several irregularities and non-transparency in the budget process," said a party source.

-- The Nation 2010-08-18

webfact · August 17, 2010

2011 BUDGET BILL

Govt confident but keeping a tight rein

By The Nation

The Democrat Party may not endorse the re-election bids of MPs who do not attend the budget debate, Deputy Prime Minister Suthep Thaugsuban warned yesterday, demanding the Democrats turn out in full force for today's House session.

"Considering the circumstances, constituents expect their representatives to work hard and those MPs found to have lapsed in their duty must face the consequences," he said.

Suthep reaffirmed his prediction the Budget Bill would be approved by the coalition vote. He played down concern that some coalition MPs from the Puea Pandin Party might oppose the spending plans.

Deputy Interior Minister Boonjong Wongtrairat said his Bhum Jai Thai Party would fully support the 2011 Budget.

Speculation about a coalition rift over the CNG bus leasing issue was false because the project was still intact pending a review, Boonjong said, voicing confidence the prime minister would give his approval once it had been scrutinised further within a few months.

"The project is sound and beneficial to the people because it is the only way to salvage the Bangkok bus service, which is running at a loss of Bt7 million per day," he said.

Boonjong said fellow MPs from Bhum Jai Thai were well disciplined and would vote along the party line, dismissing threats of dissident votes.

The opposition whips held a meeting to finalise preparations for today's debate on the budgetary allocations.

Opposition chief whip Witthaya Buranasiri said he was concerned about spending related to the government's stimulus package.

Of the Bt346 billion earmarked for the package, the actual spending accounted for 7.6 per cent of allocated funds and reimbursement took place in a suspicious manner due to a lack of financial records, Witthaya said.

He claimed the government appeared to have condoned suspicious military spending, including funds earmarked for the Centre for Resolution of the Emergency Situation, which were reimbursed without proper auditing.

The opposition would not approve passage of the Budget Bill unless the government clarified those outlays, he said.

Pheu Thai MPs particularly wanted to hear Interior Min-ister Chaovarat Chanweerakul explain the "lopsided" allocation of funds for local government, he said, referring to allegations of spending plans designed to influence the election outcome.

Some 80 Pheu Thai MPs have reserved slots to speak from the floor during the three-day debate before casting a final vote on the Budget.

-- The Nation 2010-08-18