With consumer and investor confidence dampened by higher oil prices and political uncertainty they are concerned that the government may be unable to balance its Bt1.36-trillion budget this fiscal year.

Moreover, as interest rates rise, managing public debt will become trickier, and if growth slows further there will be fewer fiscal options on the table for stimulating the economy, officials said.

Some officials blame the administration of caretaker Prime Minister Thaksin Shinawatra, saying it spent too much during the past fiscal year.

"Had the government saved money, we would not face a cash-flow problem now," said one official who asked not to be named.

However, a spokesman for the ministry, Somchai Sujjapongse, said the government would balance its budget this year. The Excise Department will be able to collect more revenue because the tax exemption on diesel ended in March, he said.

Government revenue in the first six months of this fiscal year - from last October to last month - exceeded target by only 1.5 per cent. Year on year, however, it was up 4.5 per cent to Bt568 billion.

The lion's share came from the Revenue Department, which collected Bt409 billion. The amount was 8.6 per cent higher than forecast and up 14.4 per cent year on year. Revenue from the Customs Department, however, fell 10.6 per cent year on year to Bt50 billion. The amount was 17.2 per cent lower than forecast. The Excise Department also fell short of its target. It collected 132.75 billion, 12.4 per cent less than forecast and 8 per cent less than the year-ago period.

Tax revenues account for 90 per cent of government revenues.

Revenues from state enterprises exceeded their forecast by 17.9 per cent, totalling Bt62.29 billion in the first half of the fiscal year. However, the labour union at Government Savings Bank (GSB) said the government had squeezed profits by using the bank to finance its policies. The GSB and other major state enterprises gave the ministry Bt6 billion to finance its policies.

The next finance minister is likely to find it quite difficult to develop the capital market. With the privatisation of state agencies in limbo, it will be tough to boost bourse capitalisation as planned.

Caretaker Finance Minister Thanong Bidaya had targeted doubling the market's capitalisation over the next five years to Bt10 trillion, but the privatisation of state agencies was key to such growth.

Wichit Chaitrong

The Nation