The Budget Bureau plans to prepare a two-year budget framework for the first time in 55 years of state budgeting as a backup plan in case the political impasse drags on beyond July, its chief says.
Government spending is among the few engines driving the economy, so the bureau is to prepare the plan to ensure that spending remains on track regardless of whether an election takes place in July, director Somsak Chotrattanasiri told the Bangkok Post.
The budget will be for the fiscal 2015 and 2016 years, he said, adding that the two-year budget is expected to be prepared alongside the fiscal 2015 budget.
The political conflict has damaged the already faltering economy, as seen by a slew of weak economic indicators such as low consumer confidence and private investment.
Even if the poll can be held in July, budget approval for the 2015 fiscal year will still be six months behind schedule. The process will be delayed further if the election is postponed.
However, if the poll goes ahead and paves the way for a functioning government, the remaining six-month period is enough to speed up spending to shore up the sagging economy, Mr Somsak said.
Under the normal budgeting process, ministers should have set a budget outline by late January for the fiscal year starting in October. Details should be thrashed out in April and the budget is required to be sent to parliament in May. However, the caretaker government has limited authority to allow budgetary spending.
According to the Budget Procedure Act, the caretaker government is permitted to use only regular expenditure for the next fiscal year but not exceeding that of the 2014 fiscal year.
Mr Somsak said about 130 billion baht worth of the government's investment budget is expected to be carried over to the next fiscal year and this could be another driving force to boost the economy.
The bureau plans to set aside 2.6 trillion baht for expenditure and run a 200-billion-baht budget deficit in the 2015 fiscal year.
Should the new administration plan to spend more and the government's revenue collection at that time exceeds the target, it can run an additional budget deficit, probably up to 300 billion baht. But Mr Somsak opposes running a budget deficit at the ceiling of 20% of that year's expenditure as the government will be forced to cut expenditure if there is lower-than-targeted revenue collection, as happened in 1997 when Thailand suffered an economic meltdown.
The expenditure reduction could spook investors or financial institutions. They may think the government is broke and put a brake on investment and loans.
"The appropriate budget deficit should not exceed 10-15% of expenditure and leave a 5-10% gap in case revenue collection misses its target," said Mr Somsak.