Sommai set to increase deficit to 4%
published : 10 Jul 2015 at 06:45
newspaper section: Business
writer: Wichit Chantanusornsiri
The Finance Ministry intends to run a bigger budget deficit of 4% of GDP for the 2017 fiscal year if China's stock market slump continues for longer than expected.
The expansionary state budget is aimed at increasing public spending to stimulate the economy and dispel potential impact from the rout in China's stock market, Finance Minister Sommai Phasee said.
Thailand has implemented budget deficits for several years. The government plans to run a budget deficit of 1.9% of GDP for this fiscal year and 2.9% for the next one.
In the short term, the ministry will ramp up budget disbursement to 92-93% of the 2.575-trillion-baht budget for the 2015 fiscal year and urge state agencies to prepare their procurement plans to immediately start drawing down budget when the 2016 fiscal year starts in October.
Mr Sommai will accelerate budget disbursement under short-term economic stimulus measures, particularly the 78-billion-baht budget set for road construction and water management.
"If the impact [from China] persists for a long time, it will be necessary for the government to play a greater role in revitalising the economy. I think we should run a bigger deficit and the level may reach 4%," he said.
"I sympathise with exporters but I don't want to map out a plan to help the sector. What I can do is take care of fiscal policy. If we want to see economic growth of more than 3%, we must improve government spending."
He said Prime Minister Prayut Chan-o-cha was not satisfied with the disbursement rate of the investment budget and ministers must find ways to make disbursement hit the target.
The government targets 87% disbursal of the investment budget in fiscal 2015 ending Sept 30.
As of May, 187 billion baht or 41.6% of the 449-billion investment budget had been drawn down, with another 209 billion worth of contracts or 46.5% already signed.
"I am finance minister and I take responsibility for the overall picture but I can't step in about budget disbursement of other ministries. I have heard Transport Minister Prajin Juntong blamed his subordinates about drawing down budget for road construction under the 78-billion-baht budget, as nothing has been taken out so far," Mr Sommai said.
Separately, four state-run banks — the Bank for Agriculture and Agricultural Cooperatives, Government Savings Bank, Small and Medium Enterprise Development Bank of Thailand and the GH Bank — have agreed to provide loans to people who have used land titles to pledge for borrowing from loan sharks, with the aim of curbing informal lenders.