Draft bill seeks to limit public debt

Draft bill seeks to limit public debt

Legal bid to ensure fiscal sustainability

Ekniti: Important to prevent problems
Ekniti: Important to prevent problems

A draft bill on public finance will require future governments to make four-year forecasts for public debt to assure fiscal sustainability, a senior Finance Ministry official says.

The requirement is part of the ministry's effort to establish systems to monitor government expenditure and prevent fiscal problems, said Ekniti Nitithanprapas, deputy director-general and spokesman of the Fiscal Policy Office.

Even though there is a 60% public debt threshold, it is set by the ministry and is not backed by the law, he said.

Besides, the government's future liabilities are not known now, he added.    

Fiscal sustainability is among three priorities of the government. The others are sharpening the country's competitiveness and addressing economic inequality.

Off-budget spending by the previous Yingluck Shinawatra government for several policies was considered by some economists as a threat to fiscal stability.

Mr Ekniti said the necessity of stipulating a public debt ratio by law was awaiting consideration, but the International Monetary Fund recently said the ratio should not be stated in law as countries have different economic environments.

At present, the Public Debt Management Act sets a borrowing ceiling for the budget deficit at 20% of the annual budget.

To increase the country's competitiveness, the Finance Ministry has cut import duties for raw materials that cannot be produced locally to lower operating costs for manufacturers, pushed special economic zones in border areas and removed tax-related-obstacles to promote Thailand as a regional operating headquarters.

In another development, the ministry has approved nanofinance business to help with rising living costs for low-income earners and to widen their chance to access formal financial sources and narrow financial disparity.

The ministry will use fiscal policy by speeding up budget disbursement to address the country's economic problems in the short term.

In the first four months of the 2015 fiscal year starting last October, the government took out about 40% of its regular budget and 13% of its investment budget at 449 billion baht.

Moreover, the government has already inked deals for investment projects worth a combined 124 billion baht that are awaiting budget disbursement.

The government aims for expenditure of 2.575 trillion baht in the current fiscal year and for 87% disbursement of its investment budget.

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