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EXCLUSIVE INTERVIEW

Korn warns executive decrees will seriously erode fiscal discipline

Sasithorn Ongdee

The Nation

Democrat ex-finance minister insists there is room to raise funds and govt had no compulsion to take this route

BANGKOK: -- The two financial executive decrees to be reviewed by the Constitution Court have the potential to inflict irreparable damage on budgeting and financial discipline and weaken the fiscal role of the legislative branch in the future, Korn Chatikavanij, deputy leader of the Democrat Party, said in an exclusive interview with The Nation yesterday.

Korn, a former finance minister, expressed his particular concern over the executive decree that allows the government to raise Bt350 billion worth of loans for water-resources management. He insisted that this was by no means urgent in terms of need and usage. The government could use the normal parliamentary process to obtain the extra money, he said.

Korn challenged the government to answer one "very simple" question: When do you have to spend the first baht in the flood-prevention plan? He said the government could propose a bill seeking Bt120 billion as an additional midyear budget, a process that would take just two or three months.

More money, he added, could be sought through the 2013 fiscal bill, which also is due in just a few months' time.

The Constitution Court on Monday decided to review the constitutional status of the two executive decrees relating to water-resources management. It will also consider the constitutional legality of the emergency decree permitting the government to transfer to the Bank of Thailand Bt1.14 trillion in public debt.

Petitions seeking a judicial review of the two water-management decrees were filed by a group of senators and opposition Democrat MPs. The two decrees will be deliberated on as one case.

Korn's key points against the borrowing decree is that there was nothing really urgent that could not be dealt with through the normal democratic parliamentary process, and that the government's lack of clear spending and implementation plans belied the "urgency" or "emergency" claims.

"The government's possible motive could have been to avoid parliamentary scrutiny of such a staggering [amount of] borrowing," he said.

On behalf of the Democrat Party, Korn said he would submit his written argument to the Constitution Court tomorrow before being giving testimony in the court on February 15.

"The financial decree regarding the Bt350-billion loan is dangerous. If the government can do it, all succeeding governments will follow suit [issuing the executive degree to spend money] in a bid to avoid the scrutiny of the Parliament's legislative power."

He added: "The budget debate and scrutiny are a must under the Kingdom's Constitutional Law, which also requires legislation. But the government is exercising its absolute administration power and ignoring the legislation process without any real urgency.

"If the government can clarify a clear financial and implementation plan, I will revoke the petition," Korn said.

The two decrees have a negative impact on the country's economic stability, he said. The government could seek funds either off-budget or through legislation. Though the government would argue that it wanted to have the money in hand to restore investor confidences, the situation is not such that the country has no money. Yet there is no confidence in what the money will be used for.

In addition, the decree permitting the government to transfer to the central bank Bt1.14 trillion of public debt is a vague attempt to resolve a huge debt, he went on. Eventually, the burden would fall on financial users, who are clients of banks, when the banks are required to contribute more to the BOT in a bid to help pay off the Bt1.14-trillion debt left over from the 1997 financial crisis.

"Now, the Bank of Thailand is in the spotlight and analysts are asking whether there is intervention in the Thai central bank, resulting in a lower power of baht intervention," Korn said.

He insisted that the government still had sufficient room to borrow.

He and Prime Minister Yingluck Shinawatra or their representatives will be required to testify to the court next Wednesday at 9am.

"I'm not predicting whether the Constitution Court will veto the two decrees. But I would be shocked if the court rejects the two decrees and then Kittiratt [Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong] continues in his post," Korn said.

-- The Nation 2012-02-09

[exeter]

Cant beat a good decree eh! Who pays?

[waza]

Cant beat a good decree eh! Who pays?

Who always pays in the end?.............The tax payer.

[MaiChai]

At least the Democrats are educated enough to know what economics is and why its important to balance the books?

Edited February 9, 2012 by MaiChai

[BlackJack]

"Now, the Bank of Thailand is in the spotlight and analysts are asking whether there is intervention in the Thai central bank, resulting in a lower power of baht intervention," Korn said.

i would like to see a lower baht

[Tanaka]

" It will also consider the constitutional legality of the emergency decree permitting the government to transfer to the Bank of Thailand Bt1.14 trillion in public debt."

Not to worry. As soon as the members of the government have filled their pockets, the sum will look much smaller. This country is headed by retarded 13-year-olds.

[nong38]

" It will also consider the constitutional legality of the emergency decree permitting the government to transfer to the Bank of Thailand Bt1.14 trillion in public debt."

Not to worry. As soon as the members of the government have filled their pockets, the sum will look much smaller. This country is headed by retarded 13-year-olds.

I wish I understood this, T.S. Dubai aged 14.