However, the latest economic indicators suggest it will expand by only 3.5 to 4 per cent next year, while the rate of inflation is expected to be about the same, said the source.

The ministry, however, said that GDP would be higher in the next two years with estimated growth rates of 5 to 6 per cent, the source said.

The government plans to have a balanced budget for the current fiscal year of Bt1.36 trillion, but tax revenue may be lower than targeted and may possibly lead to a cash deficit of between Bt10 billion and Bt20 billion.

Speaking separately, caretaker Finance Minister Thanong Bidaya said the ministry would today submit its three-year budget plan to the Cabinet.

He did not specify whether the 2007 budget would be balanced at Bt1.476 trillion.

Thanong indicated that the government may need to run a fiscal deficit next year to boost growth but said this will be the decision of the new government formed after the election.

He also revealed that the ministry plans to convert treasury bills worth Bt170 billion to bonds.

The bills were issued to finance revenue shortfalls, when lower economic growth causes lower corporate earnings and lower government tax revenue.

He insisted that the government's cash flow is now in a healthy position and would have about Bt100 billion in treasury reserves at the end of October this year.

"Whether we issue more treasury bills depends on the cash flow, the status of the budget [deficit, balanced or surplus] and the revenue allocation to local authorities," he said.

The ministry projected government revenue in 2008 and 2009 would be Bt1.55 trillion and Bt1.69 trillion, respectively with inflation rates of about 3.5 per cent.

Public and private investment is expected to pick up after slowing down earlier this year due to political uncertainty, the source said.

Wichit Chaitrong

The Nation