Govt chases B800bn loan
Reduced tax earnings force spending cut
- Published: 7/05/2009 at 12:00 AM
- Newspaper section: News
The government faces borrowing another 800 billion baht to stabilise its finances and pay for the second stage of its economic stimulus scheme.
Deputy Prime Minister Korbsak Sabhavasu and Finance Minister Korn Chatikavanij address a news conference on the ‘‘Thai Strength’’ action plan which calls for the government to borrow about 800 billion baht to fund a second economic stimulus package over the next three years. CHANAT KATANYU
The latest heavy borrowing was made necessary after tax collection receipts fell sharply in the first half of fiscal 2009.
Finance Minister Korn Chatikavanij yesterday said he was confident the borrowing would not jeopardise the country's fiscal stability.
Mr Korn said the 1.43 trillion baht second stage stimulus scheme would spur economic growth and create from 1.6 million to 2 million jobs.
Called the Thai Khem Khang (Thai Strength) action plan, it will run until 2012.
It was earlier planned to inject 1.56 trillion baht into the economy, but the figure was revised.
All ministries were asked to revise their plans in keeping with the reduced spending, with only education and public health spared.
Under the plan, cabinet has backed an executive decree and bill, each authorising the Finance Ministry to issue bonds seeking 400 billion baht in loans, mainly from the local financial market.
Half of the 400 billion baht to be borrowed under the executive decree will go to making up this year's budget deficit.
It is expected to fall up to 350 billion baht short because of a 250 billion baht shortfall in revenue collections.
Mr Korn defended the government's decision to borrow such a large amount, saying the government had two options: do nothing or follow this strategy. "The world economy is so sluggish that if we choose to do nothing, we should not be in government any more," he said.
This was a good time for the government to borrow from the domestic money market, which has about 2 trillion baht in excess liquidity, as it could get a low interest rate.
Also, private investment had slowed, so government borrowing would not crowd out private borrowers from getting access to money.
"I am not worried about criticisms that the government is sending the country deeper into debt.
"People who criticise should tell me why these investment projects are not what the country and Thai people need."
Mr Korn said the borrowing would raise public debt to 58-61% of gross domestic product by 2012, up from its present 40%.
The peak of 61% was not too high, he said, based on international standards and when taking into account the effectiveness of the projects being funded.
About 1.1 trillion of the 1.43 trillion baht investment framework could be implemented right away, focusing on water management, transport, energy, education and public health.
"Conservatively, the investment will boost GDP by 2% each year from this year, over the three-year scheme," Mr Korn said.
A committee chaired by Prime Minister Abhisit Vejjajiva would supervise the projects, which would create 1.6 million to 2 million jobs and increase gross domestic product to more than 10 trillion baht, he said.
If achieved, this will be the first time per capita GDP has exceeded US$4,000 (136,000 baht).
Regarding the stimulus package cut, a government source said some ministers had tried to defend their ministries' budgets at the cabinet meeting yesterday, but Mr Abhisit asked them to understand the country's predicament.
Defence spending will be cut by 10%, mainly by deferring projects.
Army commander Gen Anupong Paojinda said the army could accept the cut because of the country's economic hardship.
The army's budget planning committee would consider what measures needed to be taken if the budget was slashed.
The second economic stimulus scheme was proposed after the Finance Ministry claimed the first scheme, which included a 2,000-baht cheque handout to low-paid earners, was a success.
Mr Korn said the 18-billion-baht cheque giveaway stimulated domestic consumption. Recipients cashed 11 billion baht of the cheques while the other 7 billion baht was spent in markets and shopping malls.
About the author
- Writer: SOONRUTH BUNYAMANEE AND ANUCHA CHAROENPO
