The country's economic think-tank says running a national deficit in fiscal 2007 will mean a boost for education and infrastructure spending.

The National Economic and Social Development Board (NESDB) yesterday embraced a 2007 fiscal-year budget deficit.

The board's secretary-general, Ampon Kittiampon, said a new government could safely run a deficit in the new fiscal year. That starts in October.

"It would be all right if we run a fiscal deficit at 2 per cent of gross domestic product - or about Bt150 billion," said Ampon.

Ampon said spending in key areas was essential if the country was to meet goals set out in the 10th economic and social development plan.

They are to be implemented between 2007 and 2011.

The plan recommends spending on education reform, logistics, energy and public health.

A small deficit would not derail fiscal discipline, added Ampon.

Bank of Thailand Governor MR Pridiyathorn Devakula has already expressed support for a budget deficit to spur growth.

Caretaker Finance Minister Thanong Bidaya told the Cabinet yesterday that revenue in fiscal 2007 is expected to fall to Bt1.4 trillion, down from an earlier estimate of Bt1.476 trillion.

An economic slowdown in

the next six months was expected to be significant, he said.

GDP growth next year had been revised down to 3.9 per cent from 5 per cent. Inflation would reach 3.7 per cent from an earlier estimate of 3.5 per cent, according to Thanong.

He said a new government would have to decide on a 2007 deficit or attempt a balanced budget.

The Fiscal Policy Office and other agencies would make expenditure proposals to the new government.

Thanong asserted the deficit should not be more than 2.5 per cent of GDP.

"According to international practice, budget deficits should not exceed 2.5 per cent of GDP," said Thanong.

The Finance Ministry asked the Cabinet to extend until September budget-binding obligations (the contract period between state agencies and contractors) for the current fiscal period as a way to boost public spending.

Meanwhile, Government Spokesman Surapong Suebwonglee said revenue collection in the current fiscal year was estimated at Bt1.34 trillion against estimated expenditure of Bt1.36 trillion, leaving a deficit of Bt20 billion.

The government has projected fiscal 2008 revenue at Bt1.56 trillion, Bt1.71 trillion in 2009 and Bt1.88 trillion in 2010.

Wichit Chaitrong

The Nation