2015 Thai budget bill: NCPO aims to avoid debt

[smutcakes]

You borrow short or long term 3-10 years you still have to pay it back. How are they going to repay 2.4 trillion over 10 years? Where is the money coming from?

Smutcakes any answer re the Yingluck trillions-over the 50 years, as was pointed out.?

What has the previous plan got to do with anything? They have gone, the NCPO have taken over, its irrelevant what was planned before.

[ginjag]

You borrow short or long term 3-10 years you still have to pay it back. How are they going to repay 2.4 trillion over 10 years? Where is the money coming from?

Smutcakes any answer re the Yingluck trillions-over the 50 years, as was pointed out.?

What has the previous plan got to do with anything? They have gone, the NCPO have taken over, its irrelevant what was planned before.

That's what I have been wanting to hear for 9 weeks from so many, good for you.

[billd766]

The bitter and twisted red fan boys rear their ugly heads again. At least he is aiming to keep debt down rather than corruptly take a boatload of money and put everyone else into debt, unlike some people we could mention. Good luck to him and let's hope he knows what he is doing.

How is the 'circa' 2.4 trillion project being financed now? certainly not by a budget surplus.

Th main reason that there is no budget surplus is because the PTP former government spent without worrying about payback time. They though they could always borrow the money and the taxpayers can pay it off over 50 years.

The military have inherited a financial mess from the PTP and I believe that ALL the members of the PTP should repay the state from their own money. If there is till not enough money then declare them all bankrupt starting with Thaksin.

There is nothing wrong with trying to stay within the budget especially as it is not the governments money at all as it comes from the taxpayers.

[Ricardo]

I give you the benefit of doubt whether you around in March last year when there were 2 days of heated debate in Parliment on the infrastructure project. Charts, power-point presentation were all employed and it was a lively debate which was air live and reported in the mass media.

Thanks, after all, there's no need/reason to get nasty with each other, is there ?

Yes you're right, I am generally away for two weeks in March every year, so not much online, and may well have missed it all.

But how much of the debate was about the financials, on each of the individual projects, I'd particularly focus on the HSR & track-doubling since the NCPO have clearly modified those and especially the HSR, changing it from a 4-line passenger-network hubbed on Bangkok to a 2-line freight-system feeding the main port.

All I've ever seen on those is cost-projections, nothing on profits & payback, were those covered in the debates ?

[Ricardo]

Not all debt is bad debt, sometimes it makes fiscal sense to borrow from the bank even if you could afford to pay for it at the time of purchase.

My question was serious, how will the 2.4 trillion baht scheme be financed if debt is to be avoided? I would of thought given the microscope that the issue was put under previously that this issue of funding would have been raised.

Its concerning that when previous Govt announced the plan for HSR, the TDRI were highly critical of it, saying it would need 9 mill plus passengers a year to stay afloat. Then the NCPO announce HSR and the TDRI is completely silent.

Yes, I agree with what you say, there are times when governments should borrow, perhaps to smooth net-income/expenditure mismatches, rather than be rigorous in only spending what they've actually got in-the-bank. Although if they have spare cash, which I doubt the NCPO have given the slightly-rising overall funding-requirement (which is how I interpret the CDMO figures), then perhaps tax-cuts are the answer, boosting funds available for consumers to spend. One of the justifications for the rice-scheme was after all the boost to overall consumer-spending by the better-off farmers.

I'm not sure from reading the OP, just how tight General Prayuth intends to be, he says "the proposed budget would not leave problems or debt for the country in the long run" and also that " The budget was set to be in deficit, adhering to the principles of economic sufficiency", also that " spending had to follow fiscal and monetary disciplines,", but what exactly does this mean ? We don't yet know. The extraordinary committee was given a week to study the budget and produce its report.

"He said that the country's current account is expected to be in surplus after exports improve and tourism recovers", which surely implies running a short-term deficit until exports & tourism improve, I'd say ?

PTP had planned large-scale long-term borrowing, from within the domestic savings-market IIRC, to fund their infrastructure-plans. But I never saw any serious cost/benefit analyses, or payback-details, for the various projects. Perhaps this was a consequence of not putting all the detailed proposals through Parliament for scrutiny ? That was something I did question on principle at the time, there appeared to be a curious reluctance to justify the projects, and show how they would payback and bring a net long-term benefit. If it really is a good investment, then any government (including NCOP) should be able to show the figures, to prove it !

On the HSR some important things have now changed, the previously-planned 4-line passenger-network has become a 2-line freight-project with lines from Chiang Khong & Laos to Laem Chabang Port, and it's not yet clear how much (if anything) the Chinese (who are surely the main beneficiaries) will invest towards it. The other spending on the entirely-separate SRT track-doubling projects should also be demonstrated to bring benefits, too. And details of other related-spending on rolling-stock, and the planned growth of freight on the meter-gauge network, needs to be set out more fully.

All just IMHO, of course.

Now we dont know how it will be funded, none of the real detail has been examined, despite the PTP 30% cut that everyone used to talk about the price has stayed the same....... Yes PTP were bad, but the whole justification behind the coup is to clean this place up, but they just seem to be carrying on the same road, but now any dissent is even less possible, and the details are even less transparent.

You will know & accept, from my posts, that I'm very much in favour of transparency, I hope ? I would welcome the real detail for examination, although Eric seems to think it was all covered in Parliament, in two days in March-2013. I missed that.

Since most of the spending will be over the next several years, and well after the junta have promised to step down, the General seems (from the OP) to be more concerned with getting things started, and not running-up any large debt-obligations meanwhile.

Quite right, it's more a matter for the future government(s), how they will manage the public finances then. Although I like his ideas on increasing tax-revenues, rather than cutting them to curry short-term favour, with the masses. Over the medium/long-term, government spending has to be paid for !

[Ricardo]

If we caught what the General spoke about balance budget by year 2017, it would not take a genius to conclude that the infrastructure loan will be an off-budget expenditure. I also heard that it will be paid by investment funds. I sincerely doubt that there are sufficient investors local and abroad who will buy off almost 3T investment funds. I dare say that much will be soft loan from perhaps China or some aspect of the infrastructure project will be privatized. For sure though it will not come from the yearly budget.

IIRC, PTP had been claiming that there would be no need at all to seek finance for infrastructure from abroad, and that it would easily be funded from within Thailand ?

Although I wonder how much would have had to come from government-owned government-controlled banks, the government basically lending money to itself to pay for projects, and with only the government's credibility to back it all up.

Loans from China, or direct equity investment even, would make real sense since the HSR freight-lines are mainly for their benefit, I agree.

It sounds to me as though it will now be partly-funded from the annual budgets, and partly from borrowing, perhaps over a shorter-term than 50-years.

[rubl]

With so many topics and posters it seems that a topic related to the one here was overlooked. Even I just stumbled over it myself, imagine

"Democrat Party leader Abhisit Vejjajiva expressed concern that the fiscal 2015 budget might not help stimulate the economy because up to Bt100 billion would be spent to pay debts incurred from the populist policies of the previous elected government. It has been estimated that Bt71 billion will be needed to pay for the rice-pledging scheme, and Bt42 billion for the tax-break programme to help people by their first car."

http://www.thaivisa.com/forum/topic/753208-budget-panel-tells-thai-officials-to-be-prudent/

Edited August 20, 2014 by rubl

[Ricardo]

With so many topics and posters it seems that a topic related to the one here was overlooked. Even I just stumbled over it myself, imagine

"Democrat Party leader Abhisit Vejjajiva expressed concern that the fiscal 2015 budget might not help stimulate the economy because up to Bt100 billion would be spent to pay debts incurred from the populist policies of the previous elected government. It has been estimated that Bt71 billion will be needed to pay for the rice-pledging scheme, and Bt42 billion for the tax-break programme to help people by their first car."

http://www.thaivisa.com/forum/topic/753208-budget-panel-tells-thai-officials-to-be-prudent/

But he's a charlatan and a murderer, so what can he know, about economics ?

Whoopsie, I seem to have put on my red-shaded specs, by accident !

Doesn't stop him from being right though, there was a lot of medium-term debt backing the rice-scheme, when the amount budgeted by the previous administration proved insufficient, and it will all have to be paid-back or refinanced in the next few years.

I wonder how the B350-billion flood-control spending was financed ?

[rubl]

With so many topics and posters it seems that a topic related to the one here was overlooked. Even I just stumbled over it myself, imagine

"Democrat Party leader Abhisit Vejjajiva expressed concern that the fiscal 2015 budget might not help stimulate the economy because up to Bt100 billion would be spent to pay debts incurred from the populist policies of the previous elected government. It has been estimated that Bt71 billion will be needed to pay for the rice-pledging scheme, and Bt42 billion for the tax-break programme to help people by their first car."

http://www.thaivisa.com/forum/topic/753208-budget-panel-tells-thai-officials-to-be-prudent/

But he's a charlatan and a murderer, so what can he know, about economics ?

Whoopsie, I seem to have put on my red-shaded specs, by accident !

Doesn't stop him from being right though, there was a lot of medium-term debt backing the rice-scheme, when the amount budgeted by the previous administration proved insufficient, and it will all have to be paid-back or refinanced in the next few years.

I wonder how the B350-billion flood-control spending was financed ?

Not sure that 350 billion was ever really borrowed.

As it was so extremely urgent the Yingluck Administration elected in January 2012 to give itself a decree to borrow 350 billion Baht, but they had to get things really started within 1-1/2 year. With shortcuts and forgetfulness ('Environment Impact' ?) the 1-1/2 year were past before the conditions were met and the decree expired.

The consequence of course was the need to suddenly put those 'extremely urgent' waterworks in the 2013/2014 National Budget which already had a 250 billion Baht deficit calculated and that was without the 'rice' shenanigans or the 2.1 trillion Intrastructure plan which saw items normally in the National Budget moved out. As far as I know the 'waterworks' were still 'floating' as obviously the blanket amnesty bill was more important.