Thailand plans to borrow Bt1.4 trillion to finance investment in infrastructure during fiscal years 2010-12, when foreign direct investment and exports will remain subdued, says Prime Minister Abhisit Vejjajiva.
Projects to be financed by the borrowing include roads, water ponds, schools, hospitals and residential development. The investment plans will be discussed by economic ministers in next week's meeting.
"The projects are small, but collectively they are large. Even though schools and hospitals are small, when a large number of them emerge, totally they will require a huge sum of investment," Abhisit told reporters yesterday.
He said it was not yet clear how many jobs would be created.
Abhisit announced the figures after meeting with Deputy Prime Minister Korbsak Sabhavasu, Finance Minister Korn Chatikavanij and National Economic and Social Development Board secretary-general Ampon Kittiampon. He said the sum was proposed after Korbsak's survey of ministries to be involved: transport, agriculture, education and public health.
He said during the period, each year the government would be capable of spending Bt500 billion. In setting the target, the government will take into account the ongoing US economic problems.
"All are worried about the US economic recovery. We're calculating how much the world trade slump would deplete export revenue and how much the government needs to stimulate the economy and how."
Thai Garment Manufacturers Association secretary-general Wallop Witanakorn yesterday said exports should fall even further in the second quarter, as last month's imports could show a decline of 40 per cent year on year.
Low imports mean lower demand from export-oriented factories. He urged the government to provide financial assistance to support the export sector.
Exports had been expected to contract 11 per cent.
Abhisit said the government would first estimate the required amount of spending and then would review the tax-revenue target before considering whether to raise the public-debt ceiling. The move would require a legal amendment.
"Our concerns are the ceiling in the next two years," he said, adding that a higher ceiling would be temporary.
Fiscal Policy Office director-general Somchai Sujjapongse yesterday insisted the ratio of public debt to gross domestic product (GDP) would not exceed 50 per cent despite higher borrowing. Even though borrowing was necessary to give breathing space to the economy, fiscal discipline is important. Moreover, the spending must be properly disbursed on projects that would increase people's incomes and finance investment projects.
The government must also consider how much debt it can shoulder over the next four or five years from borrowing, and debt management solutions must also be considered.
"We cannot borrow for lavish spending. It must be invested in truly crucial activities," he said, adding that while some countries' public debt had risen to 12-15 per cent of GDP, due to stimulus packages, Thailand's stood at 4-5 per cent.
Public Debt Management Office deputy director Chakkrit Parapuntakul said it was possible to amend the Budget Act during times of a revenue shortfall. However, it would not be appropriate if the amendment were to facilitate borrowing for the benefit of certain industries.
"We're unsure about tax revenue and shortfalls. At present, Thailand is capable of borrowing an additional Bt90 billion to meet shortfalls. If the shortfalls worsen, the law must be amended," he said.