Third deficit in row for Thai budget on cards
Third deficit in row for Thai budget on cards
BANGKOK (Reuters): The Thai cabinet on Tuesday gave initial
approval of a budget for the year ending September 2000 which
features record deficit spending designed to speed up economic
recovery.
The draft budget, expected to get parliamentary approval in
the third quarter, would be the third straight annual deficit
budget in a row for Thailand since it plunged into recession in
mid-1997.
Analysts said the budget was a necessary tool although nearly
half of the planned deficit spending would go towards state
bailouts of private financial institutions.
"The budget is a...balancing act, one necessary if we are
going to put the economy back on its feet," said Kitti Limsakul,
an economics professor at Bangkok's Chulalongkorn University,
adding it should help the government meet its 0.9 percent GDP
growth target.
"What the government could do is to try to curb its regular
administrative spending, failing which it may have to cut down
civil servant payrolls in the future," she added.
The 860 billion baht (US$23 billion) budget for the coming
fiscal year compares with 825 billion baht for 1998/1999.
The government plan to spend 110 billion baht more than its
projected revenue next year was needed to ease adverse social
impacts stemming from Thailand's deep recession, the Budget
Bureau said.
The agency forecast that a big tax revenue shortfall in the
current fiscal year would leave the government with a 95 billion
baht budget deficit, much higher than the 25 billion baht
anticipated earlier.
The draft budget will be reviewed further by state agencies
before it is re-submitted to the cabinet for final approval on
May 11. The revised version would then go to parliament for
debate starting from June.
"To be in line with the economic forecast for 2000, it is
still necessary to use government expenditure as a tool for
stimulating the economy and easing human and social impacts that
stem from the economic crisis," the Bureau said.
Finance Minister Tarrin Nimmanahaeminda said most of the
1999/2000 deficit would be financed by domestic borrowing.
Thailand's official think tank, the National Economic and
Social Development Board (NESDB), said it expected the recession-
hit economy to start recovering in 1999 and then show three
percent growth in 2000.
The Thai economy shrank about 7.8 percent this year, according
to the NESDB, slightly better than an 8.0 percent setback for the
year seen by the Bank of Thailand and the IMF and compared with a
1.3 percent contraction in 1997.