The so-called "fiscal responsibility" bill which enables more restrictions on government off-budget loan-seeking legislation was passed in its first reading by the National Legislative Assembly (NLA) yesterday.
Off-budget spending is expenditure not included in the regular government budget and funded through separate agencies.
The NLA unanimously voted 186 to accept the principles of the bill with three abstentions and another refraining from casting a vote.
Speaking during the bill debate in parliament yesterday, Deputy Finance Minister Wisut Srisuphan said the government can devise loan-seeking legislation for the purpose of offsetting the deficit and economic and social development with the imposed loan ceiling.
The bill however outlines stricter measures on such laws to ensure the government proceeds with matters carefully, he said.
Under current practice, the administration can simply propose its off-budget loan borrowing framework to parliament, but the bill puts more conditions on the loan-seeking legislation, which must concern urgent tasks where it would be too late to follow normal procedure, Mr Wisut said.
In addition, any loan-seeking legislation must have a clear purpose, timeline, framework and responsible agencies, he noted. Other measures must be involved, such as strict regulations on how loans could be disbursed while the loans can be sought only for projects deemed economically and socially viable.
Work must be undertaken to follow up on the loan spending and debt status, the deputy minister said, adding the Office of the Auditor-General must be reported to and the agency will have the authority to order administrative punishment against those who violate the fiscal responsibility bill.
"In the overall picture, the bill imposes a stringent and meticulous framework in line with the constitution," said Mr Wisut.
In addition, the expenditure of earmarked taxes must be in line with relevant legislation, which needs to be approved by the Finance Ministry, he noted.
NLA member Jet Siratharanon questioned whether the allocation of sin taxes to the Thai PBS TV station, the Thai Health Promotion Foundation and the elderly can no longer be done under the bill. Mr Wisut explained there will be no change since a reprieve has been given to these organisations under the bill.
The definition of the state enterprises under the bill covers organisations where more than a 50% stake is held by the government as well as their second-tier subsidiaries. Unlike current laws, third and fourth-tier subsidiaries will be not classified as state enterprises under the bill.
This issue has sparked criticism that it will pave the way for the easier privatisation of state enterprises.
But Mr Wisut said the clauses of the bill would reduce the fiscal burden on the government.
Currently, debts of third and fourth-tier subsidiaries of state enterprises are included in the public debt, but that would be no longer be the case under the new bill.
Meanwhile, the NLA also pushed through two other bills on budgetary spending procedure and environmental quality in the first reading. The three bills are required under the constitution to be forwarded to the NLA within 240 days from when the charter was promulgated.