Cuts of 100 billion baht proposed
Cuts of 100 billion baht proposed
BANGKOK (AFP): Thailand's Budget Bureau said yesterday it will propose cuts of 100 billion baht (US$2.7 billion) for the year to September 1998 to meet conditions imposed on an IMF bailout.
Budget Bureau director-general Seri Susathaporn said the cuts, which would reduce the budget to 823 billion baht, would slow gross domestic product (GDP) growth to between one percent and percent next year.
Thailand enjoyed GDP growth of 8.0 percent in the decade to 1995, but overbuilding and misallocated lending during the boom years have come back to haunt the country's ailing financial institutions.
Last week, Seri said if revenue was not increased, cuts of 170 billion baht would be needed to meet the IMF target of a budget surplus in fiscal 1998 equivalent to one percent of GDP.
Thailand must meet the target to continue drawing on a 17.2 billion dollar credit line arranged by the International Monetary Fund (IMF) following the July 2 float of the baht. The local currency has since depreciated 29 percent.
The cabinet delayed consideration of the cuts at the cabinet meeting Tuesday so that the Finance Ministry could try to come up with more revenue for its fiscal 1998 projection.
Revenue has collapsed along with private sector earnings due to the recession and a liquidity crisis.
Meanwhile, Deputy Prime Minister for economic affairs Virabhongse Ramangkura has ordered the suspension of 18 infrastructure projects, mostly road and rail, worth a total of 424 billion baht, The Nation daily reported.
The National Economic and Social Development Board will propose the suspensions to the economic ministers meeting on Monday, a day ahead of the cabinet meeting at which the budget bureau's proposed cuts will be presented, the report said.
The government is due to announce an overall financial rehabilitation plan on Wednesday, including the austerity budget and a reform package for financial institutions sinking into a quicksand pit of 1.36 trillion baht in bad debt.