Mid-year funds available for more stimulus

Mid-year funds available for more stimulus

B100bn set aside as budget delay drags on

A mid-year budget worth 100 billion baht is available for the government to finance new economic stimulus measures while the fiscal 2020 budget is held up, says a senior official at the Finance Ministry.

Stimulus measures are urgently needed to ramp up economic growth, which has been hampered by the novel coronavirus outbreak, drought conditions and the delayed fiscal budget, said Lavaron Sangsnit, director-general of the Fiscal Policy Office.

The 100 billion baht is available from the 400-billion-baht mid-year budget allocated for emergency use. The budget can fund measures to help drought-hit farmers, the fourth phase of the Taste-Shop-Spend scheme and future tourism stimulus packages, but it must be doled out by September to prevent unused budget being cancelled, Mr Lavaron said.

Borrowing carried out by the Public Debt Management Office (PDMO) is another way for the government to finance investment projects that need to be started this year, he said.

The PDMO will consider the appropriateness of additional borrowing, Mr Lavaron said.

The investment budget for fiscal 2020 amounts to 600 billion baht. Half has already been committed to contractors and the remainder is for new projects.

The law permits regular and obligatory budget to be taken out based on the previous year's budget if the legislative process for the annual budget bill is incomplete before the fiscal year starts, while new investment budget disbursement is prohibited.

The 3.2-trillion-baht annual budget expenditure for fiscal 2020 was supposed to be available from Oct 1, 2019 but was hampered by the lengthy government installation and legislative process.

The Constitutional Court ruled that the annual budget bill was valid but needed to be voted on again by the lower house for the second and third readings after some MPs were alleged to have voted by proxy.

Mr Lavaron said the annual budget for fiscal 2020 is expected to be ready by April at the latest because the revote on the bill has already passed and the Senate will vet the bill before seeking royal endorsement.

"According to the law regulating government procurement, state agencies are allowed to set the scope and details for the terms of reference and finalise bid winners even though the fiscal 2020 budget bill has yet to be acted on, allowing them to immediately proceed with procurement processes when the bill comes into force," he said. "Signing procurement contracts must be held off if the budget fails to be doled out in this fiscal year."

Patricia Mongkhonvanit, director-general of the PDMO, said the office is deciding on investment projects that can be initiated.

Under the Public Debt Management Act, the PDMO's borrowing is restricted to 10% of annual budget expenditure.

Based on the 3.2-trillion-baht budget, the state agency can borrow up to 320 billion baht, but borrowing is unlikely to hit the ceiling because only projects that need investment funds right away are allowed.

"The PDMO prepares guidelines for borrowing and sourcing funds," Mrs Patricia said. "The agency is going through projects to enure they are qualified for the borrowed funds, and the government will decide on the project later. State agencies that are responsible for investment in projects must propose the project to the cabinet for approval. Given that the fiscal 2020 budget bill will come into effect soon, some projects are ready to draw down the budget immediately."

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