Somkid downplays widening deficit

Somkid downplays widening deficit

The country's public debt is unlikely to exceed 42% of GDP this year despite a wider deficit of 550 billion baht in the fiscal 2018 budget, says Deputy Prime Minister Somkid Jatusripitak.

The public debt should not be an issue despite the government's plan to compile a supplementary budget of 150 billion baht for this fiscal year, Mr Somkid said yesterday.

"The country's public debt to GDP stood at 41.9% last year when the government introduced an additional budget of 190 billion baht in fiscal 2017," he said. "This year's figure as well is expected to stay at around 42% despite the additional budget."

The government said on Wednesday that it would compile a supplementary budget of 150 billion baht for this fiscal year, a move requiring it to borrow an additional 100 billion baht and bring the fiscal 2018 budget deficit to 550 billion baht.

That amount would mean almost hitting the ceiling of 20% of annual and extra budget expenditure plus 80% of the budget for debt principal repayment set by law, and the deficit would be the largest since the military-backed government took power in 2014.

Most of the extra budget will be allocated to the welfare and subsidy scheme for the poor, farm sector reform and Village Funds.

Of the total 150 billion baht, 100 billion will be earmarked to fund the second phase of the government's welfare and subsidy scheme for the poor (35 billion), farm sector reform (40 billion) and tambon-level development including Village Funds (10 billion), while 50 billion will go to pay back treasury reserves.

The government plans to borrow 100 billion baht for the supplementary budget, with 50 billion expected to come from greater-than-targeted revenue collection.

State-led efforts to help the farm sector and low-income earners are part of a bid to make the economic recovery more broad-based this year.

Thailand has been in a fiscal expansion mode, running budget deficits for more than a decade. The Fiscal Policy Office recently set a goal of achieving a balanced budget between 2024 and 2026.

According to Finance Minister Apisak Tantivorawong, the Finance Ministry will draft a supplementary budget bill for fiscal 2018, to go before the cabinet next month before being forwarded to the National Legislative Assembly for deliberations by March.

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