Government's 2007 budget still not ready for disbursement
The Finance Ministry and Budget Bureau have yet to finalise the 2007 fiscal budget, because expenses need to be controlled and spending on new investment projects need to be decided by the new government.
"We will conclude the exact expenditures in the next few days," said Vudhibhandhu Vichairatana, director of the Budget Bureau, yesterday.
Senior bureaucrats representing four economic institutions responsible for budget preparation - including the Bank of Thailand and the National Economic and Social Development Board - failed to reach an agreement on the level of expenditures for the fiscal year, which starts on Sunday.
The Finance Ministry has forecast Bt1.4 trillion in revenue next year.
Vudhibhandhu said the four agencies wanted ministries and agencies to curb their current spending, which has ballooned due to rising salaries of state employees. The increase in expenses has squeezed the investment budget. The civilian government the military junta plans to install will decide whether to boost capital spending on new investment projects, he said.
Although the budget bill has not been approved yet, state agencies could start spending, he said.
Earlier the Council for Democratic Reform under Constitutional Monarchy (CDRM) said the 2007 budget could start being disbursed by January. The CDRM wants the economy to run smoothly and has given assurances that it would allow the village fund, universal healthcare and SML funding schemes for villages to continue.
Earlier, the Finance Ministry wanted to run a budget deficit of no more than 1.5 per cent of gross domestic product, which would preserve fiscal discipline while spurring economic growth. Expenditures for fiscal 2007 are expected to come in about Bt100 billion over projected revenue.
The CDRM is expected to name a civilian prime minister next week. The final budget is likely to be decided after the new civilian government is formed and announces its economic policy.
Meanwhile, Apisak Tantivorawong, president of Krung Thai Bank, said prospects for the economy for the rest of this year to early next year would remain bright, thanks mainly to the early passage of the 2007 fiscal budget.
"The fiscal budget can possibly be spent faster than expected. This will boost government spending and private investment, which will benefit the overall economy," he said.
Foreign investors have gained confidence and a better understanding of the situation here after the economy withstood the bloodless coup unscathed.
The bank's corporate loan-extension rate has increased, allowing the bank to maintain its loan growth target at 7 per cent for the year.
Khunying Jada Wattana-siritham, president and chief executive of Siam Commercial Bank, said foreigners were waiting for clearer picture on the political situation. Transactions from abroad had paused, in particular, for foreign direct investment.
The CDRM announced that the 2007 fiscal-year budget would be disbursed starting this year, which would help dispel some of the uncertainty surrounding the economy and restore confidence among foreign investors.
She said the bank's lending during the last three months of the year was still difficult to predict at this point because bank had to wait to see the make-up of the new interim government as well as its cabinet.
Siam Commercial Bank has left its loan growth target unchanged at 10 per cent this year.