FPO seeks buffer for spending delay

FPO seeks buffer for spending delay

Activity needed to sustain GDP growth

The Fiscal Policy Office (FPO) is calling for measures to cushion against a postponement of state investment worth 70-80 billion baht stemming from delays in 2020 budget expenditure for 3-4 months.

The goal is to prevent economic growth from stalling later this year.

The suggestions include front-loading spending for seminars and other activities or investment during the October-to-December quarter to prevent a cool-down during that period.

Disbursement of investment worth a combined 70-80 billion baht, originally planned to be spent in the final quarter, is expected to be pushed back, said Lavaron Sangsnit, director-general of the FPO.

Although a draft bill on 2020 budget expenditure has been approved by the military-led government, it still needs to be vetted by lawmakers. Next year's state budget is expected to be delayed from the start of the fiscal year on Oct 1, 2019.

State expenditure for fiscal 2020 is set at 3.2 trillion baht, up 200 billion baht from fiscal 2019, with a budget deficit of 450 billion baht, equal to that of the previous fiscal year.

Mr Lavaron said the FPO is preparing a new package of economic stimulus measures just in case it is needed.

Pisit Puapan, director of the FPO's Macroeconomic Policy Bureau, said recently that the Finance Ministry's think tank was considering which measures would be included in the stimulus package to be proposed to the new government.

Measures that could be used immediately include those to ramp up spending for 14.5 million welfare smartcard holders and increase state enterprise investment.

Mr Lavaron said exports are the main factor dictating economic conditions. The country's outbound merchandise shipments are expected to rekindle if the lingering trade brawl between the US and China eases.

The FPO in April slashed its 2019 GDP growth forecast to 3.8% from 4% seen three months earlier as slower global growth took a toll on exports. The lower estimate came after merchandise shipments in US dollar terms shrank 1.6% for the first three months, against a target of 2% growth.

The 3.8% growth estimate assumes 3% growth in the first half and 4.5-4.6% in the second half.

Thai GDP grew 2.8% year-on-year in the first quarter, down from a revised 3.6% in the fourth quarter of last year and the slowest pace in 17 quarters.

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