A delay in approving the budget will leave the government with limited funds to finance investment projects, Vorapol said.

"The government would have only Bt320 billion in its hands - the amount that is to be left over from the 2006 fiscal budget," he said.

Key economic agencies - particularly the Ministry of Finance, the Bank of Thailand and the National Economic and Social Development Board - have lowered economic growth projections for this year because of political uncertainty.

With the absence of an official government, several projects have been delayed. Private investment and private consumption are also expected to decline because of lower confidence in the economy.

The Bank of Thailand estimated that economic growth this year would be 4.25 to 5.25 per cent. According to the World Bank, Thai gross-domestic-product growth of 4.5 per cent last year was the lowest in Southeast Asia. It compared with 8.4 per cent in Vietnam and 6.4 per cent in Singapore. This year it is also expected to lag behind neighbouring countries.

The new election is scheduled for October 15 but it remains uncertain if it will take place. The 2007 budget bill needs parliamentary approval.

"Without the approval, the Thai economy would land in huge trouble, as faces many tough circumstances, including persistently high oil prices," said Vorapol.

"The election should be held as soon as possible and the House of Representatives must be ready to consider the budget bill in the first quarter at the latest, otherwise the economy could grow at a slower pace than in 2006." 

Transport Minister Pongsak Ruktapongpisal last week admitted that the ministry's projects would also be affected by the absence of the House of Representatives.

"Next year there may be no new projects and we should focus solely on the projects that continue from the previous year," he said.

The ministry had planned to launch several key infrastructure projects, including mass transit extensions. Last week Pongsak said he had instructed the State Railway of Thailand and the Mass Rapid Transit Authority of Thailand to go ahead with bidding for three subway routes, though it remains unclear how the government would finance them.

Watcharapong Thongrung

 The Nation