Budget Bureau prepares a two-year backup plan
With government spending currently being one of the prime engines driving the economy, the Budget Bureau has been tasked with coming up with a two-year budget framework just in case the long-running political crisis goes beyond July this year.
This backup budget will cover the fiscal years 2015 and 2016, with the two-year budget expected to be prepared at the same time as the 2015 fiscal budget.
The Budget Bureau notes that even if the July national election does take place, budget approval for the 2015 fiscal year will still be six months behind schedule. If the election is postponed, then obviously the approvals will fall even further behind.
The current political impasse has meant that budgets, which would normally have been set up by the government and its ministers by the end of January, in preparation for the start of the fiscal year in October, have not been prepared.
Instead, the ongoing crisis has meant that having a government which is only in caretaker mode has led to a delay in most aspects of budgetary planning and expenditure.
The Budget Bureau has noted that if an election is held in July and a binding result eventuates with a new government being formed, then it will be possible to make up the time that has been lost and hopefully restore foreign investor confidence in order to boost the economy.
At this stage, by an act of parliament (that is, the Budget Procedure Act), a caretaker government can only use regular expenditure for the forthcoming fiscal year, and in the case of the current caretaker administration, they cannot exceed the expenditures of the 2014 fiscal year.
On a positive note, the Bureau notes that around 130 billion baht worth of government investment is expected to be available to be carried over into the next fiscal year. This money should prove a boon for driving the economy forward.
The Budget Bureau expects to run a 200 billion baht budget deficit for the 2015 fiscal year with plans to set aside 2.6 trillion baht for expenditure.
It is possible to have the budget deficit increased to up to 300 billion baht, but only if there is a new administration, not a caretaker government, and if revenue collections have exceeded their targets.
The director of the Budget Bureau, Somsak Chotrattanasiri, is reported to be opposed to running a budget deficit beyond a maximum of 20 percent of that year’s expenditure. He believes the appropriate level of deficit should not exceed 10 to 15 percent of expenditure and there should be a cushion of five to 10 percent in case revenues fail to reach expectations.