Delayed state projects likely to increase public debt, Thai PDMO says

[webfact]

PUBLIC DEBT
Delayed state projects likely to increase public debt, PDMO says
The Nation

BANGKOK: -- The Public Debt Management Office has conceded that delayed state projects could push up the nation's public debts, with consistent budget deficits for three or four years, while expecting the public debt to reach 52 per cent of gross domestic product by 2020.

Theerat Attanavanij, deputy director-general of the PDMO, said some state projects had been delayed and budgets would not be disbursed as targeted.

As a result, the office will adjust its public-debt-management plan for the third time, particularly concerning the railway double-tracking project.

That project has been delayed by difficulties in its environmental impact assessment (EIA). This results in a drop of Bt125 billion in borrowings for fiscal 2015.

Under the PDMO's adjusted plan, borrowings will likely rise by Bt638 billion. Of these, about Bt390 billion will be for the main state budget and the remainder for investment in state and state-enterprise projects.

Most of the planned borrowings are expected to come from local sources, with a limit on external borrowings at Bt60 billion.

Under this plan, the public debt is expected to reach 48.3 per cent of GDP in fiscal 2016.

The public-debt-management plan for fiscal 2016 will be proposed to the Cabinet for approval this month.

In June, the public-debt level was 42.36 per cent of GDP or Bt5.68 trillion. By the end of this year, the figure is expected to reach 44.9 per cent of GDP because of additional borrowings of more than Bt200 billion, which would be added to this fiscal year's budget deficit.

Theerat said public-debt management was still within the framework of fiscal sustainability although additional borrowings would likely add to the deficits for the next three or four years.

The public debt is expected to stand at 51 per cent of GDP in 2017, likely rising to 52 per cent in 2018 and 53 per cent in 2019, and likely falling to 52 per cent in 2020.

These figures would still be within the fiscal-sustainability framework, as compared with the high public debt of 61.7 per cent of GDP in 2000. The fiscal-sustainability framework sets the maximum public debt at 65 per cent of GDP.

Source: http://www.nationmultimedia.com/business/Delayed-state-projects-likely-to-increase-public-d-30266514.html


-- The Nation 2015-08-14

[Thai at Heart]

Since when was this increase in public debt announced or approved. That is a whopping increase..... 42% today and rising consistently for the next 5 years.

And people said the reds would be the ones pushing up the public debt to dangerous levels. This is quite a serious consistent increase. Why?

Edited August 14, 2015 by Thai at Heart

[zaphod reborn]

And people said the reds would be the ones pushing up the public debt to dangerous levels.

They did. Are you forgetting the rice-pledging scheme? They are borrowing an additional THB 200 million. The loss for spoilage, corruption and unsold rice from the rice-pledging scheme is estimated at THB 600 million. See the difference?

[Thai at Heart]

And people said the reds would be the ones pushing up the public debt to dangerous levels.

They did. Are you forgetting the rice-pledging scheme? They are borrowing an additional THB 200 million. The loss for spoilage, corruption and unsold rice from the rice-pledging scheme is estimated at THB 600 million. See the difference?

Well 45% is considered more than manageable, but allowing it to rise like this isn't a good trend. But with poor gdp growth this is what happens..

Wonder if that is factored in?

[Colabamumbai]

You will notice the price of goods now increasing daily, cigarettes up 5 Baht today, Thai brand.

Also anything that has goods that must be paid for in U.S. dollars, you can expect a price increase.

At first it is great for Americans wow 36 Baht to the dollar, but now after 6 months that will be paltry compared to the prices you are going to pay for those of us who live here full time.

[laocowboy2]

Another rubbish headline - I despair of the Nation. Where to start?

1. The article is not really about borrowing or debt but about the REAL problem - which is the current government's inability to get investment budget spending going. Nine months into the fiscal year (end June) only 39% of the investment budget had been spent (for details, check out Presentations under the Investor Relations section of the Kasikorn Bank website). This is one of the main reasons for the slowing economy.
2. As regards debt levels, 43% debt to GDP is LOW. Check out ratios in the EU, for the US or (if you really want to see excess) Japan. If higher borrowing is being spent on (productive) investment, then GDP will rise. If both numerator and denominator are rising at roughly the same rate, the ratio will be roughly stable.

The author of the article evidently bunked off economics 101 while at school.

[Srikcir]

"some state projects had been delayed and budgets would not be disbursed as targeted."

Nooooo!

This is a complete reversal to recent government economic decisions and a disaster.

To date only:

- 30% of 46 state enterprises' investment budgets worth Bt350 billion had been disbursed so far.

- 53% of the Bt449-billion state investment budget for fiscal 2015 ending this September has been disbursed.

After the pleadings from the Thai business sector for the last ten months and the recent urging of the Japan External Trade Organization for government infusion of capital into Thailand's economic system, the government seemed to have finally agreed to “accelerate disbursement of the state investment budget and implement other stimulus measures in the remaining two months of fiscal 2015 to boost the country's economic growth rate this year” - Finance Minister Sommai Phasee.

Until now it had been largely the objection of Deputy PM Devakula in charge of the economy for the government incurring additional debt for economic stimulus which also reflected Prayut's concerns as well. Sommai seemed to have finally prevailed in the face of economic collapse.

But this sudden reversal seems to follow the advice of Amornthep Chawalla, director of the research centre at CIMB Thai, “the tourism sector is the only hope left for growth in the remaining months of 2015.”

Therefore, no stimulus funds needed, Prayut is happy and the Thai people lose.

[Thai at Heart]

Another rubbish headline - I despair of the Nation. Where to start?

• The article is not really about borrowing or debt but about the REAL problem - which is the current government's inability to get investment budget spending going. Nine months into the fiscal year (end June) only 39% of the investment budget had been spent (for details, check out Presentations under the Investor Relations section of the Kasikorn Bank website). This is one of the main reasons for the slowing economy.
• As regards debt levels, 43% debt to GDP is LOW. Check out ratios in the EU, for the US or (if you really want to see excess) Japan. If higher borrowing is being spent on (productive) investment, then GDP will rise. If both numerator and denominator are rising at roughly the same rate, the ratio will be roughly stable.

The author of the article evidently bunked off economics 101 while at school.

Ah, but hidden in the other paper, it quantified the increase of the debt to gdp of a whopping 17%. Now this article is nowhere to be found in the post, and this article here scoots around in circles without settling to say this.

I want to wait to get other articles to confirm it, but 17% in a few years is a startling increase and it definitely should be scrutinised by a parliament.