Caretaker Finance Minister Thanong Bidaya said yesterday that the mass-transit investment would be affected by delays to budget disbursement for the 2007 fiscal year, and this delay might be as long as three months.

Nevertheless, caretaker Deputy Prime Minister Somkid Jatusripitak confirmed that the budget for next fiscal year would be balanced. He also said the government would solve the problem of delays in budget disbursements by using money left unspent by state agencies in the current fiscal year.

"We are not in a position to set aside spending on investment for fiscal 2007 as scheduled," Thanong said.

He was commenting after a meeting with Somkid to discuss the budget disbursement, which has been delayed because Parliament has been unable to deliberate the budget because the lower house has yet to meet.

"Our worst-case scenario is that the budget disbursement for the next fiscal year might be delayed to the first quarter of next year," Thanong said.

He said that if the April 2 election was nullified, a new election would likely be held in July. In this case, a new government will come into office no earlier than August or September. The next fiscal year starts October 1.

Somkid said that the planned mega-projects would be affected, although other routine administrative projects would go ahead as usual.

Thanong said he believed the delay in budget disbursements would have no repercussions on private investments.

He went further, to say that the government still planned a balanced budget.

"We are still firm in our stance that the budget should be balanced, according to our projection," he said.

Somkid has asked the Budget Bureau to reschedule the timeline for the 2007 fiscal year's budget so that it is ready to be implemented within one to three months, said Somchai Sujjapongse, spokesman for the Finance Ministry.

Thanong said the government could speed up its spending in the current fiscal year, especially funds that will be left unused this year. This amounts to about Bt100 billion. Increased spending will offset the delay in disbursement of the budget for next fiscal year. So far, 53.6 per cent of the fiscal 2006 budget, worth Bt1.36 trillion, has been spent.

He said each ministry would be able to speed up investments because the Finance Ministry would soon ask the Cabinet to approve construction of a new government complex.

Normally, around 5 per cent of the fiscal budget is carried over to the following year. The remaining carry-over from fiscal 2006 should lessen the impact from the delayed disbursement of the fiscal 2007 budget, Thanong said.

The government plans to spend Bt1.476 trillion during the next fiscal year.

But, there are fears that the government might not be able to run a balanced budget in the next fiscal year, because of the same negative factors that recently led the Bank of Thailand to revise downwards its forecast for economic growth in 2006. The central bank dropped the figures by half of one percentage point to between 4.25 per cent and 5.25 per cent.

As well as delays to the government's mega-projects, corporate tax receipts could be reduced. The Association of Securities Analysts is expected soon to revise downwards its projection for corporate earnings for this year.

Chakramon Phasukavanich, permanent secretary of industry, said the rate of growth in industrial production would be a mild 6 per cent this year, due to the appreciation of the baht, higher oil prices and higher interest rates.

"The industrial sector should increase its competitiveness in terms of quality and product types, to attract buyers. These will be the key survival strategies," he said.

The National Economic and Social Development Board will convene this month to review its 2006 growth forecast.

Wichit Chaitrong

The Nation