Naris Chaiyasoot, director-general of the Fiscal Policy Office, said political uncertainty had adversely affected the economy, but the ministry had ensured that at least Bt600 billion of carry-over budget will be injected in the fourth quarter of this calendar year.

The government will accelerate disbursement of the capital budget and have a clearer plan for infrastructure and transport projects in order to motivate the private sector to invest, said Naris, adding that only 40 per cent of the capital budget was committed to being disbursed.

"We also have billions of baht of state enterprises' budget left, of which we expect to spend as much as possible," he said.

Caretaker Finance Minister Thanong Bidaya earlier expressed grave concern over the economy next year being affected by the delayed budget because the election is scheduled to be held on October 15. He said the planned election would cause the budget to actually be injected into the economy in the middle of the year.

The impact is likely to increase if the budget is postponed again after the Office of the Attorney-General's fact-finding committee on Tuesday recommended referring to the Constitution Court the cases concerning the possible dissolution of the Thai Rak Thai and Democrat parties.

The recommendation has caused great concern because it could further delay the election. A postponement is likely to give members of the two parties at least 90 days to find a new party, as required under electoral law.

Naris said only the existing budget could be disbursed if a new budget is not legally approved, but he downplayed concern over a delayed disbursement, saying the funds would largely be withdrawn in the second half of the fiscal year.

"The budget is hardly disbursed in the first quarter of the fiscal year, so the money does not disappear from the economy so much. It continues to flow through the system although it is not as high," he said.

The director-general called for the private sector to have confidence in economic stability and fiscal and monetary discipline, and boost investment further.

Inflation is likely to decrease in the second half, so the private sector may return to investment mode, he said. Commercial banks have also been cautious on credit provision, as indicated by a loan-to-deposit ratio as low as 88 per cent. They are taking into account debtors' cash flow rather than market share.

"For infrastructure projects it does not matter which party the government comes from, but it depends on which one is more transparent," he said.

In addition, Naris urged the private sector to recognise cycles in global economic uncertainty which are difficult to avoid, "but the country's balance of payments has been strong".

Nontaphon Nimsomboon, a Bank of Thailand director, said the central bank had been monitoring and stabilising the baht. He believes the currency will stabilise well within the range of Bt37 to Bt40 against the dollar.

Anoma Srisukkasem

The Nation